Insight reveals growth of structured notes in fund
Structured notes have grown to a quarter of Insight Investment's £243.3m Diversified Target Return fund, the company said.
Patrick Armstrong, co-head of the multi-asset group at Insight, said one of its most recent structured calls was on interest-rate derivatives, which priced in a Fed rate rise of 140 basis points over 12 months.
This hike, Mr Armstrong said, seemed unrealistically high.
"It didn't tie in with anything that was going on."
He and fellow co-head Ana Cukic have consequently bought into a note that would yield a 50 per cent return if Fed rates did not rise 300bps over the year to 23 June 2009. Until then, the note's value will be pegged to the market.
Mr Armstrong said the only conditions that could wreck the bet would benefit the equities and commodities in the portfolio and compensate for the downside.
Mr Armstrong and Ms Cukic have also introduced the position into their £87m Insight Wealthbuilder Balanced and £77.4m Diversified High Income funds.
Other structured bets in the range include calls on the performance of Asia Pacific equities over one year.
