Man AP Enhanced Series 2 Ltd (‘Man AP Enhanced Series 2’) is the latest addition to the innovative Man AP product family. The product is offered in a choice of USD-class bonds and EUR-class bonds, each targeting substantial medium-term performance of around 16-18% (USD-class bonds) and 15-17% (EUR-class bonds) for a volatility of around 13-15% for both bond classes.1 The Man AP Enhanced Series 2 portfolio will comprise an allocation to the AHL Institutional Programme and the complementary investment styles of arbitrage, directional, equity hedge and long/short equities. In addition to a profit lock-in feature2, Man AP Enhanced Series 2 also has enhanced principal protection of 120% (USD-class bonds) or 115% (EUR-class bonds) with the capital guarantees provided by Citibank, N.A. London Branch.3
Man AP Enhanced Series 2 will utilise the portfolio construction, risk management and complementary investment style selection expertise of Man Global Strategies, one of Man Investments’ core managers.
Forming the cornerstone of the Man AP Enhanced Series 2 portfolio, the AHL Institutional Programme trades a diversified portfolio of over 100 highly liquid global futures and foreign exchange markets on around 27 exchanges, 24 hours a day. The programme employs sophisticated computerised processes that seek to identify and take advantage of real-time price inefficiencies. The markets traded include stock indices, bonds, currencies, short-term interest rates and energy and metal contracts.
AHL is one of Man Investments’ flagship managed futures programmes and contributed to Man Group plc being recognised as the world's best provider of managed futures in the 2004 Euromoney Private Banking Survey.
The target annualised returns for Man AP Enhanced Series 2 Ltd are made feasible by constructing a diversified portfolio that seeks to provide initial investment exposure of approximately 100% of NAV. The intention is to increase incrementally investment exposure to approximately 150% of the prevailing NAV, subject to trading performance and at the investment manager’s discretion. This means that at the target investment exposure, for every USD/EUR 100 invested there is approximately a USD/EUR 1504 investment exposure, thereby enhancing the upside performance potential.
Antoine Massad, Head of Middle East and Asia at Man Investments, said, “Given the current world economic outlook, the high allocation to AHL together with other directional strategies will be attractive for investors.”
Capital guarantees provided by Citibank, N.A. London Branch provide bondholders, for each bond outstanding and redeemed on the maturity date, with at least 120% (USD-class bonds) or 115% (EUR-class bonds) of their initial investment at the maturity date.3 Additionally, a profit lock-in feature allows for a portion of net new trading profits to be locked in following periods of sustained profitability which may raise the level of the guarantees at maturity.2
Citibank, N.A. is rated AA for long-term debt by Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies Inc., and Aa1 by Moody’s Investor Services Limited. Citibank, N.A. is part of Citigroup which was born out of a merger, in October 1998, between Citicorp and Travelers Group. Citigroup has grown to be the largest financial institution in the world. As at 31 December 2004, it had a market capitalisation of over USD 260 billion and over USD 1.4 trillion in total assets.
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