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E D&F Man hedges its bets

ED & F Man has introduced a guaranteed equity bond that invests in a portfolio of hedge fund strategies.

The maturity date and target return differs depending on which currency class has been chosen. Investments in euros will provide a return of 14 per cent a year until March 31, 2012 and investments in dollars will mature on March 31, 2011, with a target return of 15 per cent a year.

Money invested into this offshore bond is divided into two parts. One element is used to create the guarantee that investors will get all their original capital back when the bond matures. The rest is directly invested into hedge funds and is geared.

The bond uses alternative investment strategies such as relative value strategies, which refers to trading between the various securities and loans issued by the same company. Another strategy is merger and reorganisation strategies, which means buying shares in companies that are about to be taken over before their share prices go up.

This bond is likely to have limited appeal for UK investors, but high net worth clients who are prepared to take a risk on a geared offshore investment might find it worthwhile.

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