Charles Schwab & Co. today introduced the Schwab Hedged Equity Fund, its second new product to use the Schwab Equity Ratings system, new ratings software that grades stocks A through F based on a number of factors including industry exposure and risk management [see MFMN 8/5/02].
The fund went into subscription on Aug. 6 and will continue collecting assets until Aug. 30 before beginning operations on Sept. 3. The initial minimum investment in the fund is $25,000, with additional minimum investments of $5,000.
The fund will both invest in stocks rated A or B, which Schwab expects will outperform the market, as well as short stocks rated D or F, which the company expects will underperform the market.
"Many investors and independent advisors are interested in hedging strategies that extract value from stocks that are expected to underperform the market," said Jeff Lyons, executive vice president with Schwabs asset management products and services group. "But access to traditional hedge funds carries a high price tag as well as substantial minimum investments. We believe investors will be attracted to the convenience, familiarity and lower cost of a traditional mutual fund."
Robin Jackson, senior vice president, capital markets, and Elie Spiesel, vice president, electronic trading, will manage the fund.