Gartmore to push into retail hedge fund market

By Raji Menon

LONDON (Reuters) - Fund manager Gartmore is preparing a major push into the UK retail hedge fund market after picking up strong demand for its first products in the sector, a senior executive said.

The plan comes after a rough year for hedge funds worldwide, and following steep outflows from Gartmore's own institutional funds, but advisory Board member Phil Wagstaff is convinced demand from retail investors is on the rise.

"The hedge fund world and the UK retail world will collide - we see this as a core area for us going forward and we see this as a growth area for the industry," Wagstaff, who is also head of global distribution at the firm, told Reuters.

Gartmore is in the process of launching a UK Absolute Return Fund after it launched in February a European long/short product. Both funds comply with EU Ucits rules for cross-border sales and are variations of Gartmore's existing hedge funds for institutions.

He pointed to the 50 million pounds raised by the European fund as evidence of strong demand from retail investors.

"We have plans to launch a number of these (absolute return) retail funds which will be variations of our hedge funds.

"What happened last year was that a lot of people were caught out because they had been buying hedge funds that had a lot of beta.

"Those funds will struggle going forward and people will look to invest in 'genuine' hedge funds - funds that provide genuine low correlation with equity markets," said Wagstaff.