Instreet launches structured gold fund
Instreet has launched a structured gold fund claiming it will generate an annual 7 per cent indicative income return while avoiding any possible downside risk.
The fund will adopt a three-year hold strategy and pay fixed semi-annual coupons to investors. Returns will be based on changes to gold prices relative to a reference value which will determine the final value of units in the fund.
Instreet managing director George Lucas said this value would be set on 16 November and the fixed semi-annual coupons would be paid on set dates, regardless of the performance of the gold price.
Lucas said Instreet had been engaged in an IPO-style fund raising and expected to raise $5 million to $10 million for the closed-end fund, which will use an automated buy-write strategy.
"The buy-write gives away some of the upside for income and there will be monthly cap of 5 per cent on positive performance, depending on gold price movements," Lucas said.
The fund has been established after demand from financial planners for a product that would provide capital protection in the event the price of gold fell, with Lucas stating the fund would offer full downside risk protection.
"There are bullish financial planners who believe gold prices will rise again and can see this as a way of turning yield into income while offering clients exposure to gold as part of a portfolio diversification strategy," he said.
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