Protean Investments has launched a six-year bond backed by UK gilts that is designed to shield investors from the default risk associated with traditional corporate bonds. 
 


The RPI Plus Note will be fully collateralised with UK government bonds, which would be replaced by G7-issued bonds should the government default, and will carry a projected return of RPI plus 3 per cent annually.
 


Protean said that investors in the bond will not need to be concerned about the risks associated with a company default.
 


Clive Moore, managing director of Protean, explained, ‘By swapping single company default risk for FTSE 100 risk the bond replaces the possibility of losing all an investor’s money, with a link to the FTSE 100 Index if it falls by more than 50 per cent or more.’
 


Should the FTSE 100 Index halve, thereby putting investors’ capital at risk, Protean said they would be affected by any market fall at the end of the six-year investment term.
 


Moore criticised the performance of many absolute return and hedge funds, which he said have ‘disappointed and failed to justify high levels of fees’.
 

Investments in the bond can be made via investment platforms or through a stockbroker, but the product is not available for direct investment.