Man-IP-200 was established in 1996 and as at June 30, 2005 it had delivered a total return of 255.4 per cent. It invests in the AHL diversified programme and the Glenwood Portfolio. AHL is a London-based subsidiary of Man Group which has run managed futures portfolios for 22 years. Its diversified programme is the driver for returns within Man-IP-200 and trades a portfolio of 130 global futures and foreign exchange markets using a sophisticated trading system.
Glenwood is a Chicago-based subsidiary of the group that has been constructing fund of hedge fund portfolios since 1987. The Glenwood Portfolio is designed to provide diversity and lower the overall volatility of Man-IP-200 by investing in a range of hedge funds.
Due to the long-term interest rate difference between the dollar and euro currencies, Man Investment expects the euro share class to deliver returns of 1 per cent less than the dollar share class. Both share classes will mature on May 31, 2018 but holdings can be redeemed before then, subject to an early redemption fee of between 1 and 4 per cent until December 1, 2011.
Man-IP-200 will be geared by 60 per cent to boost returns, enabling 100 per cent of the assets to be exposed to the managed futures element with the remaining 60 per cent going into the hedge fund portfolio. However, the target level for gearing will not take place immediately – it will begin at 40 per cent and will rise to 60 per cent depending on the trading performance.
Investors will also benefit from a capital guarantee provided by JPMorgan Chase Bank and a profit lock in feature may be triggered, locking in some of the profits on a discretionary basis when the fund performs well.
One benefit to high-net-worth investors using this product is that it has a visible track record, but it is only open for a limited period. Although the capital return is guaranteed, the returns above this will be less certain.