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Tilney hedges and protects

Tilney Asset Management has established Opal Tailored notes, a capital-protected fund of hedge funds.

This offshore fund is linked to the performance of the opal optimum strategy fund, a fund of hedge funds. Investors have two investment options. They can choose to protect 100 pr cent of their original capital and will also get 100 per cent of any rise in the underlying fund. Alternatively they can protect 80 per cent of their original couple, in which case they will get 175 per cent of any rise in he underlying fund.

The underlying fund invests in a range of hedge fund strategies such as long/short equity, global macro are different types of arbitrage. It invests only in hedge funds that have a proven track record with good managers at the helm. He portfolio is constantly under review to ensure the manager has stayed close to the original objective of the fund. Tremont Capital Management, a leading expert on hedge funds, will help with the research side.

To calculate the returns, the average monthly reading of the net asset value of the fund is compared with the average levels during the last six months of its five-year term.

This fund sits mid-way between capital-protected hedge fund products such as those offered by Man Investments and capital-protected funds from the likes of Sarasin Investment Management. However, these products do not allow a choice of capital protection, whereas the Tilney fund, as the name suggests, can be tailored to suit different risk profiles.

However, products which offer a choice risk complicating an already complicated product. Although this one has a low minimum investment and can be held in an Isa, it is likely to be of interest to sophisticated investors who are comfortable with the intricacies of hedge fund investing.


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