Alternative investment firm KPR Capital, advised by London-based Goldwinds Asset Management, has rolled out a diamond fund designed to capitalise on investors’ hunger for safe-haven assets.

The firm has launched the KPR Diamond Fund, which offers investors access to physical diamonds, capitalising on the price appreciation of top quality colourless stones. 

At a time when stock and other markets have suffered heavy falls, alternative investment managers such as KPR argue that diamonds represent a way to spread risk over the long run. The fund aims to provide returns which are not correlated with traditional asset classes, act as a hedge against inflation and benefit from the supply/demand imbalance over the long term. The fund is part of KPR Fund SPC, a Cayman Islands open-ended investment company.

Funds that invest in physical diamonds – as opposed to funds holding shares of mining firms that may extract diamonds and other precious minerals – are rare. One other fund in the sector is Diamond Circle Capital, a London-listed fund investing in polished diamonds.

The investment manager has used a team of diamond industry experts to create the fund.

“The long term outlook for diamonds is robust. We are confident that this fund will provide the means for investors to diversify their portfolio and gain exposure to physical diamonds in a cost-efficient way. We see this as a huge investment opportunity that investors should not miss,” said Giovanni Pennetta, chief executive of Goldwinds Asset Management.

The fund, which is open to investors in February, will launch on 2 March 2009. The fund has a minimum investment of $250,000. Investors in the fund may benefit from the option to purchase stones on selected diamond sales by the fund at a wholesale price.