Old Mutual is starting a protected hedge fund that guarantees investors a minimum return. The Old Mutual Prosper 80 fund will give investors a return of at least 4% over the Bank of England base rate, according to ifaonline.co.uk. Furthermore, the hedge fund will never return less than 80% of the highest account value.
The fund will be an open-ended vehicle with daily pricing that also locks in the highest value. Investors may take out more than the 80% value when available but can always use that value as a fall-back.
With a target volatility of 5%, the fund will have relatively low downside risk. The minimum investment will be £5,000, with a 1% annual management fee.