Coutts has launched a guaranteed fund of hedge funds, the performance of which will be linked to the...
Coutts has launched a guaranteed fund of hedge funds, the performance of which will be linked to the interest paid on the bank's Orbita Diversified Strategy Deposit account.
The group is intending to raise at least £100m in Orbita Diversified Strategy. Clients will be able to transfer money from existing accounts into the three-year deposit fixture.
After the first year, account holders will be offered a quarterly facility to break the fixture but, should this be used, there is no guarantee of recouping the initial deposit.
Portfolios included in the fund of hedge funds will be chosen through Coutt's due diligence process, which involves selecting the best performers in each asset class. A variety of strategies will be offered including market neutral, directional, equity and fixed income.
Minimum investment for the guaranteed product is £150,000 or $250,000. There is an annual management charge of 1.25% and a 10% annual performance fee on gains over Libor plus 200 basis points.
Robert Dawkins, head of alternative investments at Coutts, said: 'In the current low interest rate environment, many of our clients are looking for ways to increase the yield on their deposits without increasing their risk to capital. The new deposit is designed to do just that.'
The group is also set to launch the Asian Orbita fund later in the year. Details of the fund are yet to be released but, like the other portfolios in the range, it will only be available to Coutts' existing clients and will invest in hedge funds focusing on Asia including Japan and Australia.
Dawkins said returns on the fund could be similar to those on the European-focused Orbita strategy, which returned 20.77% from launch in July 1999 to September 2001.
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