Popular Overseas Strategy Seeing Increased Demand in U.S.

Nov 18 2005 | 8:39pm ET

As the hedge fund industry copes with scandal after scandal this year, and both inflows and returns are sluggish, investors are looking for ways to enter the alternative marketplace while at the same time limiting their risk exposure. One way of doing this that has taken off in Europe and Asia, but remains on the sidelines in the U.S., is investing in hedge funds through principal-protected notes.

"Guaranteed principal notes have had huge growth in Europe," said Victor Park, managing partner of New York-based hedge fund Alternative Asset Management, adding that the notes are also popular in Asia. He predicts that demand will increase stateside as U.S. investors become more familiar with this type of product. 


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