Oct. 3 (Bloomberg- John Wasik) — Suppose you wanted to invest in hedge funds and your principal was guaranteed by the Federal Deposit Insurance Corp.?
At first blush, this sounds like an easy way to anchor a risky investment within a safe vehicle.
Two federally insured certificates of deposit (CDs) are being sold that are linked to the return of a hedge fund index maintained by Hedge Fund Research, Inc. of Chicago. One is offered by HSBC Securities USA, a unit of Europe’s largest bank. The other is sold by Bear Stearns Cos., the New York-based securities firm.
While these certificates may add hedge-fund diversification to your holdings without any risk of losing your initial investment, these products are not to be confused with the insured products you can buy at almost any bank, backed by the FDIC up to $100,000.
