Irish retail investors are expected to be offered a range of hedge fund investments by financial institutions in coming weeks.

Irish Life will soon set up a fund of hedge funds aimed at wealthy retail investors. Hibernian Investment Managers and Eagle Star are considering adding hedge funds to their existing products range. Davy Stockbrokers is talking to a number of potential hedge fund suppliers to add the investment product to its range of investment options for clients.

Friends First has just introduced hedge funds with a minimum investment required of £50,000 (€63,490). Group planning and marketing general manager Mr John Cunningham said the products are aimed at sophisticated high net worth individuals. Hedge funds aim to make positive returns regardless of the direction of the markets. Using various strategies including short selling, buying long, leverage (borrowing) and financial derivatives, hedge fund managers aim to make profits even when the value of underlying assets such as shares are falling.

But hedge funds, which depend on the skills of the funds manager, are higher-risk investments than most traditional products. Investors are attracted by potential high rewards. High-profile funds have included Mr George Soros's Quantum Funds and Mr John Meriweather's Long-Term Capital Management Fund, which eventually had to be bailed out by the US banks.

"This is not an investment for your pension fund. Our view is that no more than 15 to 20 per cent of any client's portfolio should go into hedge funds, so a client would need to have total investments or funds to invest of about £250,000 to £300,000," Mr Cunningham said.

Friends is offering two funds. Its currency fund, managed by the Dublin-based Alder Capital, is investing and switching between four currencies - yens, swiss francs, euros and dollars. The equity fund, managed by London-based Thames River Kingsway, is taking long and short positions on European equities.

The new products reflect demand from clients who have more money, are prepared to take greater risks and want ways to diversify their portfolios, he said.

Irish Life says its fund will be aimed at retail investors with about £100,000 to invest. While the minimum investment required for the hedge fund will be £20,000, Irish Life will advise investors that no more than 20 per cent of their total portfolio should be invested in hedge funds.

The head of the retail investment division, Mr Stephen Ryan, said its fund, a joint venture with the US group Alpha Investment Managers, will operate a multi-manager strategy and invest in between 15 and 20 hedge funds to reduce risk. Clients will be able to exit the funds four times a year but will be advised to invest for a minimum of five years, he said.