Man Investments has introduced Man AP unison series 1, a capital guaranteed bond that invests in multi-manager hedge fund strategies.
The Man AP product range was established more than three years ago with the introduction of Man-AP stratum. As many of the products in the range carry a capital guarantee, they tend to have a closed-ended structure. To keep investment opportunities open for investors, new bonds are issued and this is why Man AP unison series 1 was introduced.
Glenwood and RMF - both subsidiaries of Man Investments - will allocate the strategies to a range of hedge fund managers using a mixture of strategies, enabling the bond to perform in all stockmarket conditions.
The bond has a 12-year term and is available in euros or dollars. It has a target return of between 14 and 16 per cent a year, with around two thirds of the volatility of conventional stockmarket investments. It consists of arbitrage, managed futures, directional, equity hedge and long/short equity investment styles and the return of the original capital is guaranteed regardless of the performance of those strategies.
In addition to the capital guarantee, there is a profit lock-in feature which increases the amount investors are guaranteed to get back if the underlying investments perform well. The aim of this feature is to lock in approximately half of any profits the underlying investments produce.
Conventional stockmarket investments are unable to produce double-digit returns, and hedge fund strategies represent an alternative way of attaining higher returns. Man Investments' combination of high returns with capital protection could appeal to high-net-worth clients who are reluctant to risk their capital. But one problem is the lack of transparency involved in the investment process, with the finer details of the investment process undisclosed.