The Alternative Strategies Fund will be diversified across a number of underlying hedge fund strategies.
Russell has given an initial group of 14 managers start-up money and the firm said it expects more to be added as the assets under management increase. The firm declined to name the funds.
Russell expects the largest share of investors to come from Europe, where it has redistribution agreements with private and large institutional banks. Investments in the fund can be denominated in euros, dollars, pounds or yen.
The firm is also in talks with institutions interested in investing. Derek Doupe, Russell associate director of alternative investment, said the firm hopes to grow the fund to several hundred million dollars by year end.
Managers will aim for annual returns of 10% to 15% with less volatility than investments tied to traditional stock and bond markets. Doupe said the new fund will charge an annual management fee of 1%.
Frank Russell said it currently has more than three billion euros in a number of alternative investment funds.