South African fund manager Invesco has launched a capital protected hedge fund that uses listed and over-the-counter derivatives. Brett Bastin, head of structured fund products at Invesco in London, said the fund will use futures to go long or short on U.S. long-dated bonds or large cap stocks. Bastin explained the futures strategy is designed to give the fund a stable source of returns. It can then use forwards to hedge the currency risk.
Bastin said the fund is aimed at institutional investors and high-net-worth individuals. He noted the launch of the fund reflects demand for protected products. Invesco has around USD180 billion under management and has launched similar products in the past
The fund aims to give a risk-adjusted return of around 8%. The target capacity is GBP5 million (USD9 million).
Barclays Bank provides the capital protection through a constant proportion portfolio insurance (CPPI) wrapper, according to Bastin.
