Wealthy Europe gears up with hedge fund exposure

Leveraged investments in hedge funds sounds like too risky a bet for private investors. But that’s exactly what European wealth managers are recommending – and their clients are biting. Christopher Jeffery reports

Capital-protected hedge fund products have been all the rage in Europe since the end of the bull run in global equity markets three years ago. Investors with burned fingers found the prospect of further losses intolerable and sought the safe-havens of principal guarantees. The irony is that the cost of borrowing during the past three years has fallen to record lows. This means gearing has never been cheaper.

Bruce Terry, president of $1.2 billion Connecticut-based fund of funds Weston