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21 Jan 2008

Mutual Fund to Replicate Hedge Fund in Japan

BNP Paribas Securities announced plans to launch a mutual fund in Japan which will go after similar investment returns to those generated by hedge funds.

The mutual fund will target regional banks and other institutional investors replicating the structure and investment methods of hedge funds.

Japanese regional banks have begun to hold back on hedge fund investments since the requirements for new capital ratios mandate stricter assessment of credit risks for institutions. Since this move last year by the Bank for International Settlements, a growing number of overseas brokerages have begun offering mutual funds and other investments that replicate methods adopted by hedge funds but offer greater transparency.

A Canadian asset management company in which BNP Paribas holds a stake will oversee management of the fund. Because the fund invests in exchange-traded funds and bond futures, it offers higher liquidity and lower costs compared with individual hedge funds charging high fees, according to the Canadian firm.

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