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Platinum shines in all conditions

Platinum Capital Management has established the Platinum all

weather fund which aims to make a profit for investors by exploring

price differences between the stocks and options within the same

companies.

As the name suggests, this hedge fund has the ability to perform well

regardless of stockmarket conditions. It has a target return of

between 10 per cent and 14 per cent a year and is available in US

dollars and euros. It is available to investors with a minimum

investment of £100,000 and those with smaller investments of at

least £25,000 can access it through the Platinum portfolio bond.

The fund applies a long and short equity strategy to the largest 50 to

100 US companies listed on the S&P 500 index. These companies

were chosen because stocks on the S&P 500 index are highly liquid,

enabling the hedge fund manager to dip in and out of the market

whenever suitable opportunities arise.

The hedge fund manager will look at the companies on a bottom-up

basis assessing factors such as cash flow, but paying particular

attention to the prices of stocks and options within each company. As

the stockmarket and the options market trade independently, the

stock price could be higher or lower than the option price.

Price differentials could prompt the fund manager to buy on one

market and sell on another to make a profit. However, the fund

manager can only go short on the options side, not in relation to the

underlying stocks and this is designed to lower the risks.

The fund&#39s selling point is likely to e its ability to produce double digit

returns within the current climate of uncertainty, but it is likely to suit

only high-net-worth and institutional clients who are prepared for

higher than average risks.

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