Noble Investments introduces capital guaranteed futures fund

Asia''s rich take a punt on a multi-manager hedge fund with an eight-year maturity and a principal guarantee.

Noble Investments is introducing a new hedge fund to Asia's high-net worth individuals. The Opal Plus EMTN (Euro medium-term note) fund is an alternative structured product with two tranches denominted in US dollars and euros.

The multi-manager fund has a capital guarantee provided by AAA-rated French asset manager CDC IXIS Capital Markets which Patrick Aregger, managing director of Noble Investments, says appeals to local investors who are nursing wounds from the global stockmarket downturn of the past 18 months.

"Investors like the protection provided by the guarantee," says Aregger, who is distributing the fund through private banks.

He says the guarantee also helps investors to overcome their concerns with investing in hedge funds. "There are a lot of people who are afraid that hedge funds will be the next bubble to burst, but I am not convinced this will happen. Yes, there might be more money flowing into the market than in the past but I think this will result in lower returns rather than a bursting bubble." He doubts whether hedge funds will enjoy the spectacular 20%-plus returns experienced in the late-1990s.

Noble's Opal Plus EMTN fund carries a minimum investment of $50,000 and offers weekly pricing but has an eight-year maturity period with penalties for early redemption. Up to 50% of profits will be reinvested. Aregger hopes to raise $30 million from Asian and overseas investors before subscriptions close in mid-April.

RPM Risk & Portfolio Management AB is acting as advisor of the portfolio. Initial allocations have been allotted to four futures managers including OSV Partners, Transtrend, Grinham and P/E Investments.

Aregger says the managers have been chosen for their track record but also for their risk management controls. "We like systematic managers rather than those that trade on their guru status," he says. "We have insisted on having access to their intra-day trading reports so that we can keep an eye on their positions."

The futures managers will be restricted to holding no more than 2% in any given security and periodic checks on cross-holdings will ensure a low correlation in assets between managers.

Aregger says Noble Investments is now reviewing the prospect of launching a multi-manager fund made up of Asian fund managers. "We would market this product to European investors," he says. "They like the idea of investing in Asia because of the low correlation to their European holdings making it the ideal diversification play."

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