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Tam McVie, investment director of mutual funds at Standard Life Investments, said the fund was a “palatable core investment”, as it offered low volatility and targeted a steady average return of Libor plus 500 basis points a year over a three-year period.

Many advisers use adventurous multi-asset strategies in the Cautious and Balanced Managed sectors to deliver steady cash-plus returns for investors. But Mr McVie said the Global Absolute Return Strategies fund did not fit the description of an IMA Cautious Managed or Balanced Managed fund.

“From a reporting point of view, it would have struggled to fit in a Cautious or Balanced Managed sector,” he said.

Mr McVie said the fund of hedge fund strategies that fitted more naturally into the Absolute Return sector could grab a significant share of the core portfolio market, but that it might take two or three years for them to do so. He said this was due to the complexity of their investments and their need to build a track record.

“I have spoken to some advisers who use FoHF strategies as a core of their portfolios, but I don’t think that’s the case all the way through the country,” he said.

Mr McVie said volatile market conditions could accelerate this process, but he denied SLI was launching the fund as a knee-jerk reaction to market conditions.

He said the company had been preparing the product for the retail space for 13-14 months following its strong institutional track record.