Coronation has launched two sterling denominated hedge fund notes offering a level of capital protec...
Coronation has launched two sterling denominated hedge fund notes offering a level of capital protection and featuring a lower than average minimum investment.
The notes, Coronation Principal Protected and Coronation Leveraged, will be invested in a portfolio of arbitrage hedge funds. This will invest only in established hedge fund managers with at least $250m under management and targeting high annual returns.
Minimum investment in the notes is £25,000 and target returns to investors, net of all fees, are 8% to 12.5% per annum in the Principal Protected Note and 13% to 26% per annum in the Leveraged Note.
The Principal Protected Notes will invest in a portfolio of low risk arbitrage hedge funds and have a guarantee issued by Dresdner bank, which offers a 100% return of capital after five years.
The Leveraged Notes will invest in a portfolio of low risk arbitrage hedge funds together with leverage of three times the initial investment and will not incorporate a capital guarantee. If the return on the underlying investment portfolio exceeds the cost of the borrowing, investors will receive a boost to returns but there is no protection available on the down side.
Although most hedge funds are denominated in US dollars, Coronation said it will hedge US dollar exposure into sterling to create sterling based returns for investors. The group is aiming to raise £100m from the issue.
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