Oct 14 2005
Bond tied to hedge fund launched - Financial Times
Barclays Capital and Signet Capital Management, two large hedge funds have launched a new bond. The payout structure of the bond is linked to a basket of hedge funds. This provides another method of investing in non-traditional investments.
Unlike a regular hedge fund, where your money is at direct risk, and it is locked in for a certain amount of time. This bond will pay regular income, and up to 90 percent of the principal will be protected. Also, Barclays will provide daily liquidity, so you do not need to wait to pull your money out. Traditionally, when you invest in a hedge fund, your money is locked in for several years. With the bond, half of the gains from the funds will be paid out, as the coupon payments.
Performance is linked to 30 hedge funds managed by Signet, an investment adviser and fund of funds manager. Through leverage from Barclays, the bond could see gains or losses as much as twice the size of those in the underlying Signet fund.
Source: http://news.ft.com/cms/s/d738521a-3c0c-11da-94fb-00000e2511c8.html