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Investors finding value in structured products based on hedge funds

In the search for diversification across asset classes, structured products have a role to play. Investors cautious about taking on or increasing direct exposure to hedge funds, but who would still like a share in the superior upside they can produce, are turning to structured products that offer various combinations of market participation and capital protection. Sara Utecht reports from London and Phyllis Feinberg from New York

Investors who want to diversify into the hedge fund universe but have constraints on how they do it, can find a solution through structured products. These vehicles offer a way to access hedge funds that may be off limits to direct investment.

A hedge fund structured product can appeal to investors with little appetite for risk or who face legal, tax or compliance constraints. They can also provide investors with a regular income.

Eric Personne, head of fund derivatives in EMEA at Merrill Lynch

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