Simple Alternatives LLC, a startup mutual fund company focusing on
hedge fund investments for registered investment advisers and small institutions, has hired Bruce MacDonald, 39, as its chief investment officer.
Mr. MacDonald was formerly the director of asset allocation and risk analysis at the University of Virginia Investment Management Co., which oversees the school's endowment, and is one of three founders of New Canaan, Conn.-based Simple Alternatives.
The other founders of Simple Alternatives -- which plans to launch its first fund of hedge funds in October -- are Josh Kernan, 41, who until June was director of alternative investments and managed accounts at
Charles Schwab Corp., and James Dilworth, 45, who has worked at Common Sense Investment Management and Middlebury Capital Partners International, which manages investments for the
Charles Schwab family, other wealthy families and European financial institutions.
Simple Alternatives is focusing on equity fund of fund structures that will be managed by 10 to 15
hedge fund managers. The company will require a minimum investment of $1 million per institutional investor and offer only I-share classes.
Simple Alternatives currently has six employees, including its founders, and expects to launch its first fund on Sept. 30 with a net asset value of about $100 million. Seed money is expected to be provided by institutional investors who Mr. Dilworth declined to name.
“We have two target clients: people currently invested in traditional limited partnership structures who want a more liquid, mutual-fund type investment, and advisers who want to allocate their client capital in fund of funds but can't because of structural limitations,” such as high minimums or tax issues, Mr. Dilworth said.
The ten subadvisers of Simple Alternatives' first fund, the RBB Fund Inc.'s S1 Fund, include Argonaut Capital Management in New York, run by macro fund manager David Gerstenhaber; Courage Capital Management LLC, in Nashville run by Richard Patton; and New York-based Moab Partners, an event-driven fund run by Michael Rothenberg and David Sackler, according to a filing with the Securities and Exchange Commission.
The firm's funds will be serviced by PNC Global Investor Servicing, which was recently purchased by the Bank of New York Mellon Corp.
“RIAs say they need alternative product, and there is a strong demand for a mutual fund structure,” Mr. Dilworth said.
Advisers can use
portfolio management software to allocate their investments across all of part of their clients' portfolios, he noted.
