Principal guaranteed savings and investment system and method

Abstract

A system and method for mass market hedge find investing is proposed that preferably works in conjunction with the U.S. Treasury's Treasury Direct program for direct investment in U.S. Government securities. A primary investment in a principal-guaranteed, fixed term financial instrument, such as U.S. Government securities, including U.S. Notes, Bonds and Treasury Inflation-Protected Securities (TIPS) having principal linked to the Consumer Price Index, wherein the principal is guaranteed to the extent of the full faith and credit of the U.S. Government, generates an interest income stream. The interest stream is electronically diverted to a separate account within an aggregated pool invested in a hedge fund over a predetermined time horizon. The fund is preferably run by an experienced chief portfolio strategist and a money-management team.

Description

FIELD OF THE INVENTION[0001]The present invention relates generally to the field of investments, inclusive of investing in all asset classes, and in particular to investing in hedge funds, without risking financial principal. The primary focus of the invention is to provide a method for investing in riskier assets while guaranteeing investment principal. The invention establishes principal guaranteed investments, which include, but are not limited to, hedge funds, private equity, venture capital, real estate, indices, philanthropy and investments related to all asset classes.BACKGROUND OF THE INVENTION[0002]Investors have begun pulling their money out of conventional investment tools, such as stocks, equity funds, bond funds, and money market funds and look toward alternative investment tools in hopes of attaining a positive return on their investment. One such alternative investment tool is a hedge fund. A hedge fund uses a pool of capital for leveraging an investment portfolio tha...

AI Technical Summary

Benefits of technology

[0011]The system and methods of the present application comprise one or more computers that preferably market, sell and implement a hedge fund business model. Information and computer software stored and executed on a general purpose computer provides an Investor with the ability to participate in hedge fund investments without unduly risking financial principal.

Problems solved by technology

Mutual funds, on the other hand, are limited to converting a portion of their portfolios to cash or to shorting a limited portion of stock index futures to protect portfolios against declining markets.

Mutual funds, on the other hand, are highly regulated and are restricted to the use of non-conventional investments, such as short selling and trading in derivatives, which make it more difficult for fund managers to outperform the market.

However, conventional hedge funds have one restriction, which is imposed by professional investors.

Although hedge funds provide a powerful alternative to and provide advantages over conventional mutual funds for investors, hedge funds have several drawbacks.

First, unlike mutual funds, hedge funds are not available to the general public.

However, typical hedge funds have fewer than one hundred investors.

Therefore, the pool of potential investors for hedge funds is limited.

One potential limitation of hedge funds is that they are not always diversified.

Although hedge funds are designed to provide an absolute return, the non-diversification can lead to high risks and high volatility.

Although hedge funds are designed to minimize the volatility and risks, investing in a single sector can lead to inherent fluctuations in the rate of return, which may be more than some investors are willing to tolerate.

Each hedge fund manager will apply different amounts of hedging and different amounts of leverage to his or her portfolio, thereby leading to different amounts of risk.

However, the fund of funds approach has several drawbacks.

First, conventional fund of funds still require that any investor must meet the requirements for an individual hedge fund.

Therefore, the individual investors, or limited partners, retain a substantial amount of risk.

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