Monday, September 06, 2004
More On Barclays HF Biz
September 04, 2004 A hedge fund for £3,000
HEDGE funds have long been regarded as the preserve of the wealthy. But this week Barclays Bank has launched a product that allows investors to dip a toe into the hedge fund pool for just £3,000.
The Woolwich Protected FTSE Hedge Plan links the return to investors with the FTSE Hedge index of more than 40 hedge funds. If this rises over the plan’s five-year term they will receive two thirds of any increase plus the amount invested. If the index falls, just their original capital is returned.
Hedge funds have long carried the reputation of being high-risk investments where hot-shot managers take large bets on the movement of anything from stock markets to currencies.
They have also tended to have very high minimum investment levels of £100,000 or more, putting them way out of reach of the average investor.
But Colin Dickie, of Woolwich Plan Managers, says that hedge funds, with a wide range of assets from which to choose, can offer a valuable counterbalance to portfolios made up solely of equities and bonds. And the Woolwich plan offers controlled exposure to hedge funds for just a few thousand pounds.
When measuring the performance of the plan the starting level will be the value of the FTSE Hedge index on October 28. The closing level will be the average of the index’s twelve monthly closing levels in the plan’s final year.
But Simon Farrant, of Towry Law, the independent financial adviser, says that private investors should be very careful before putting money into any product linked to a hedge fund. He says: “The golden rule is: never invest in something you do not understand and it is notoriously difficult to grasp the way hedge funds work. Each manager will have a slightly different approach and none is keen to reveal its investment technique, so investors have little idea how their money is being used.
“In this case you are not investing directly in a hedge fund but in an index-based product. These usually have high up-front charges and in Woolwich’s case this is 9 per cent. In order to pay for the promise that their capital will be returned, investors have to forgo one third of any rise in the index and this, in my view, is too high a price to pay.”
Woolwich says customers can apply now to invest in the plan, either through a Barclays adviser or by ringing 0800 5877495.
MARK ATHERTON
Copyright 2004 Times Newspapers Ltd.
HEDGE funds have long been regarded as the preserve of the wealthy. But this week Barclays Bank has launched a product that allows investors to dip a toe into the hedge fund pool for just £3,000.
The Woolwich Protected FTSE Hedge Plan links the return to investors with the FTSE Hedge index of more than 40 hedge funds. If this rises over the plan’s five-year term they will receive two thirds of any increase plus the amount invested. If the index falls, just their original capital is returned.
Hedge funds have long carried the reputation of being high-risk investments where hot-shot managers take large bets on the movement of anything from stock markets to currencies.
They have also tended to have very high minimum investment levels of £100,000 or more, putting them way out of reach of the average investor.
But Colin Dickie, of Woolwich Plan Managers, says that hedge funds, with a wide range of assets from which to choose, can offer a valuable counterbalance to portfolios made up solely of equities and bonds. And the Woolwich plan offers controlled exposure to hedge funds for just a few thousand pounds.
When measuring the performance of the plan the starting level will be the value of the FTSE Hedge index on October 28. The closing level will be the average of the index’s twelve monthly closing levels in the plan’s final year.
But Simon Farrant, of Towry Law, the independent financial adviser, says that private investors should be very careful before putting money into any product linked to a hedge fund. He says: “The golden rule is: never invest in something you do not understand and it is notoriously difficult to grasp the way hedge funds work. Each manager will have a slightly different approach and none is keen to reveal its investment technique, so investors have little idea how their money is being used.
“In this case you are not investing directly in a hedge fund but in an index-based product. These usually have high up-front charges and in Woolwich’s case this is 9 per cent. In order to pay for the promise that their capital will be returned, investors have to forgo one third of any rise in the index and this, in my view, is too high a price to pay.”
Woolwich says customers can apply now to invest in the plan, either through a Barclays adviser or by ringing 0800 5877495.
MARK ATHERTON
Copyright 2004 Times Newspapers Ltd.
# posted by Tom @ 6:53 PM 
