Thu Jul 22, 2010 4:11pm EDT
* Offering to be launched in conjuction with Deutsche Bank
* Could appeal to institutional and retail investors
BOSTON, July 22 (Reuters) – Hedge fund manager John Paulson plans to launch a new fund in Europe that hopes to capture money from investors with smaller wallets, a person familiar with his plans said on Thursday.
His New York-based hedge fund firm, Paulson & Co, is preparing a so-called UCITS open-ended investment fund in the coming months, the person said.
The new portfolio, which will be launched in conjunction with Deutsche Bank (DBKGn.DE), will be modeled after the holdings and bets Paulson makes in the funds already managed by his New York-based Paulson & Co.
Paulson, who has been meeting with investors in Europe and the United States in the last weeks, said in May that he planned to restrict access to his roughly $19 billion flagship portfolio this summer. Fund managers often stop taking in new money if they feel they have too much to invest nimbly.
A spokesman for Paulson said the fund manager was not available to comment.
The planned launch of the Undertakings for Collective Investment in Transferable Securities (UCITS) open-ended investment fund was first reported by the Financial Times.
The UCITS structure has become very popular at a time when hedge funds are facing stricter regulations around the world but want to boost their assets under management. With a UCITS structure, management firms can market their fund across continental Europe, making it more accessible to both institutional clients and wealthy individual investors with smaller investment minimums and the ability to withdraw money more often.
Thanks to his bet against the U.S. subprime market, which netted his fund roughly $15 billion, Paulson has become one of the most closely watched managers in the $1.6 trillion industry.
His six-year-old flagship Paulson Advantage fund has returned an average 22.85 percent per year. This year, however, market tumult has hurt Paulson along with many others. The firm’s biggest portfolio lost 9 percent in the first six months of the year.
Paulson’s reputation was tarnished some this year when his hedge fund firm became drawn into the fallout surrounding the lawsuit filed by U.S. securities regulators against Goldman Sachs Group over a supbrime mortgage-backed security. Paulson’s fund made hundreds of millions when the value of the security collapsed.
The SEC didn’t allege the hedge fund did anything wrong, but Paulson had to spend several weeks explaining the matter to his investors. Goldman settled the civil suit for $550 million last week. (Reporting by Svea Herbst-Bayliss, editing by Leslie Gevirtz)