Close Fund Management and Man Investments have set up a hedge fund product guaranteeing initial capital.
The product, which is aimed at investors looking to diver-sify their portfolios away from traditional equities and bonds, is targeting annualised returns of 11-13 per cent over the medium term and annualised volatility of 7-9 per cent.
A capital guarantee provided by Royal Bank of Scotland ensures the return of 100 per cent of investors' initial investment at the maturity date in eight years, six months.
Shares can be redeemed on a quarterly basis at net asset value.
Minimum investment is £10,000. Initial commission is up to 3 per cent, with annual trail commission of 0.4 per cent. The hedge fund is now open to investors and is expec-ted to close on October 29.
The product follows the launch earlier this year of the Close Man hedge fund which raised £70m. Man Investments says while the UK market is still lagging behind other European markets in their use of hedge funds, this sentiment is changing and with the right product, there is the appetite for a vehicle that can diversify portfolios and reduce risk.
Close Fund Management managing director Marc Gordon says: “Unsurprisingly, investors' two main concerns are losing and making money. The beauty of this product is that the initial capital return is guaranteed but it also has the potential of producing double-digit returns.”
Man Investments (Europe) regional manager James Jacklin says: “There is a widening recognition in the UK that exposure to alternative investments such as hedge funds can enhance traditional investment portfolios by exp-loiting the interplay of upward, downward and unstable market conditions.”