Franklin Templeton raises $1.3 billion in retail-friendly hedge fund

[June 17, 2015]  LONDON (Reuters) - A Franklin Templeton hedge fund aimed at retail investors has taken in $1.3 billion since its 2013 launch to become its fastest growing fund launch of any stripe over the last five years, company officials said.

The Franklin K2 Alternative Strategies Fund allows investors for whom hedge funds are normally out of reach to commit as little as $1,000 to the fund, which in turn invests in positions advised by hedge funds including Chilton Investment Company, York Capital Management and Graham Capital Management.

"Although K2 has been investing in hedge funds for over 20 years, we have seen a growing level of demand, especially since 2008, for alternative investment opportunities particularly in a more daily liquid format," David Saunders, founding managing director of K2 Advisors, a unit of Franklin Templeton, said.
 

"Investors today are faced with an array of risks in traditional asset classes which are driving them to seek alternative investment choices, and there is broad-based demand for liquid alternatives."

Unlike traditional hedge funds, which can require a minimum investment of $100,000, so-called liquid alternatives are cheaper, more liquid and more transparent funds, and as such appeal to smaller or retail investors.

The combined market for such funds in Europe and the United States has risen by about 40 percent annually since the financial crisis to more than $600 billion, a 2014 Deutsche Banks survey showed.

Franklin Templeton's fund charges only a flat fee and no performance fee, which in traditional funds can be as much as 20 percent of any profits, and offers investors an option to invest or take out their money on a daily basis.

(Reporting by Nishant Kumar in LONDON and Svea Herbst-Bayliss in BOSTON; editing by Simon Jessop)

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