Investec Financial Products is selling a structured note with embedded options to give investors capital protected exposure to Nova Alpha, a fund of hedge funds. Andrew Irvine, head of structured investment products in London, said it is launching the product because of demand for capital preservation and interest in the hedge fund sector.
Bear Stearns structured the note by purchasing a zero-coupon bond, to guarantee investors 100% of their capital, and then call options to allow 80% participation in the upside. Both the note and option have a seven-year maturity.
Hedge Fund Research will manage the Nova Alpha fund of funds, which is made up of 10 different hedge fund strategies including long/short equity, convertible arbitrage and distressed securities and 26 different managers.
