Macquarie opens hedge fund strategies to retail investors

06 September 2005

Macquarie Newton Specialist Funds (Macquarie Newton) announced today it would give retail investors the opportunity to invest in its hedge fund and specialist equity strategies, which were previously only available to Macquarie Bank and wholesale investors.

Macquarie Newton Specialist Funds was founded in October 2003. Prior to this Macquarie Bank traded a variety of hedge fund strategies via the principal trading desk of its Equity Markets Group. In October 2003 the principal traders from the Equity Markets Group joined Macquarie Newton as portfolio managers and commenced trading hedge fund strategies in a fund environment. Since that time the Newton series has only been available externally to wholesale investors.

Principal trading is practised by investment banks globally and refers to trades that banks conduct using their own capital.

This is the first time that Macquarie Newton has opened its hedge fund strategies to retail investors.

Cathy Kovacs, Division Director in Macquarie's Equity Markets Group, said this was an exciting opportunity for retail investors to access Macquarie's impressive expertise in a variety of hedge fund strategies.

"Macquarie has previously opened five such strategies to wholesale investors, but never before have they been available to the retail market," Ms Kovacs said.

Macquarie Newton Specialist Funds Management, part of the Macquarie Bank Group, already has $92 million under advice, including managed accounts and Macquarie Bank's investment. Ms Kovacs expected this figure to grow to over $500 million in the next few years.

"Experienced retail investors are looking for the same kind of access to absolute returns as wholesale investors and we see this as a real growth area," Ms Kovacs said.

"Demand for absolute returns has soared in recent years as investors look to hedge fund strategies as a means of diversifying their exposure. Macquarie has traded absolute return strategies for many years and has developed very considerable skills in this area."

Retail investors will be able to access the funds managed by Macquarie Newton from mid-September 2005 via registered managed investment schemes issued by Macquarie Portfolio Management Limited.

The minimum subscription is $20,000 for direct investors, less via administration platforms.

Ms Kovacs said Macquarie had a boutique trading model for hedge funds, which were offered within a strong operational risk framework with advanced execution, pricing, risk management and compliance monitoring systems.

"Our model is designed to suit the risk and return requirements of a wide range of investors," Ms Kovacs said.

"It does not rely on the upward movement of the equities market, but strives to provide good returns in a variety of market conditions. Our funds provide diversity across a variety of sophisticated hedge fund strategies in a way that can provide attractive risk-adjusted returns".

The Macquarie Newton series comprises five single strategy funds: Special Events Fund, Australian Absolute Return Fund, Buy Write Fund, Global Futures Fund, and Global Equity Futures Fund - Enhanced. It also includes a multi-strategy fund called the Macquarie Newton Multi-Strategy Fund, which aows investors to access a portfolio of Macquarie Newton strategies, including four of the above, within one investment.

For a limited time a new fund, called the Multi-Strategy Fund - Capital Protected Series, will also be offered with a 100 per cent finance facility to enable approved retail investors to leverage their exposure to the Macquarie Newton strategies.

The last 12 months performance (to 29 July 2005) of the funds are as follows:

Investment Performance[1]

Australian Absolute Return Fund 10.10%
Special Events Fund 9.78%
Buy Write Fund 14.11%
Global Futures Fund 29.4%
Global Futures Fund - Enhanced 39.57%

Past performance is not necessarily a reliable indicator of future performance. For more recent Fund performance, visit

Information about Newton Funds

Special Events Fund: This fund provides exposure to special situations that arise in the Australian and New Zealand share markets, including arbitrage opportunities arising from mergers and acquisition transactions, relative value arbitrage opportunities, and Initial Public Offerings or share buybacks. This fund aims to deliver consistent returns with low to moderate volatility and a low correlation to the Australian share market.

Australia Absolute Return Fund: This fund is designed to provide returns that are uncorrelated to the Australian share market. Using a quantitative model to select stocks, and by aiming for market neutrality, this fund aims to achieve absolute returns with low to moderate volatility. This fund provides an alternative to traditional long only equity funds.

Buy Write Fund: This fund aims to enhance income from an Australian share portfolio by investing in a portfolio of dividend paying shares and further enhancing income by writing options, a traditional strategy known as 'buy and write'. This fund's objective is to provide long-term investors with a return potentially higher than the return of the Australian share market.

Global Futures Fund: This fund provides investors with leveraged exposure to major equity markets around the world using futures contracts, This funds uses systematic trading models to take advantage of short term price movements in global equity markets. The fund aims to achieve high returns with high volatility. The Global Futures Fund - Enhanced employs up to twice the leverage of the Global Futures Fund.

For further information, please contact:

Cathy Kovacs
Division Director
Equity Markets Group
Tel: (612) 8232 8683

[1]Actual long term data for each fund is not available. Additionally the short data history is not representative of the potential performance of the Funds during a variety of market conditions. Total returns are prepared on an entry to exit basis ( i.e. they include all ongoing fees and expenses and assume reinvestment of all distributions but do not take into account any Contribution Fees, Withdrawal Fees, government changes or tax payable by the investors.

This general advice has been prepared by Macquarie Portfolio Management Limited ACN 092 552 611 ("RE"), the Responsible Entity of the Macquarie Newton Funds ("Trusts"). Units in the Trusts will be offered under a Product Disclosure Statement (PDS) expected to be available from 12 September 2005 from Ask Macquarie on 1 800 025 513. All potential investors should obtain a PDS from the issuer relating to the Trusts and consider it before making any decision about whether to acquire, or continue to hold, that particular financial product.

This advice does not take account of your objectives, financial situation or needs. We recommend you obtain independent professional advice before making any financial investment decision. Information may be affected by the accuracy of assumptions, risks and other uncertainties which may cause the actual figures to differ. Past performance is not indicative of future results. The information has been prepared in good faith, with all reasonable care, but to the extent permitted by law, no member of the Macquarie Group accepts any responsibility for any errors, or misstatements, negligent or otherwise. Investments in the Trusts and the underlying funds are subject to investment risk, including possible delays in repayment and loss of income and capital invested. None of Macquarie, RE or any Macquarie Group company guarantees the performance of the Trusts or the underlying funds, the repayment of capital or any particular rate of return. An Investment Manager, a related party of the RE, has been appointed to provide investment advice and services to the underlying funds of the Macquarie Newton Multi-Strategy Fund. The Investment Manager may receive fees for acting in this capacity. Macquarie or its associates, officers or employees may have interests in the financial products referred to in this information by acting in various roles, may buy or sell the financial products as principal or agent, may effect transactions that are not consistent with this information and may receive fees, brokerage or commissions for acting in these other capacities.

Information current as at 6 September 2005.

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