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Patrick Armstrong, co-head of Insight's multi-asset group, said the chief counterparties in the note agreements were Merrill Lynch, Goldman Sachs, Morgan Stanley, Barclays and SEK.

Bank of America since bought out Merrill Lynch. Goldman Sachs and Morgan Stanley agreed to continue as stand-alone, regulated holding companies and received capital injections from Warren Buffett's Berkshire Hathaway and Mitsubishi UFJ, respectively.

Mr Armstrong said criteria for selecting a counterparty included at least a double-A credit rating. He said notes were relatively high up the capital structure, so if a counterparty defaulted, note-holders would receive priority payouts if conditions permitted.

More direct exposure to banking risk in the fund includes holdings in Danske Bank and Royal Bank of Scotland. But Mr Armstrong said the yields on these banks were now high following the latest turmoil in financials.

In the debt markets, Mr Armstrong said he and fellow co-head Ana Cukic had been looking at leveraged loan portfolios and already bought some senior loan tranches. Mr Armstrong said only extreme conditions would prevent senior tranche holders being paid out in full.