Swiss private bank Julius Baer has launched a structured version of its Physical Gold fund which offers 95 per cent capital protection.

In the current economic environment climate investors are increasingly turning to gold as a hedge against the prospect of inflation or deflation. Indeed, just last week a study by London investment boutique Moonraker Fund Management found that 9 out of 10 US hedge fund managers interviewed are investing in gold to counter inflation.

Julius Baer has also recently increased its forecast for the price of gold, expecting an ounce to reach $925 by the end of this year and $1050 by the end of 2010. Previously the bank predicted an ounce to cost $875 at the end of 2009 and $900 in 2010; this represents an increase in the forecasted price of an ounce by nearly six per cent for 2009 and nearly 17 per cent for 2010.

But while a number of firms are looking to tap into the precious metal’s anticipated gains, Julius Baer’s funds are somewhat unusual in that they invest only in physical gold in the form of standard 400-ounce bars, rather than in companies which are involved in the mining, exploration, development, and production of gold; rarer still, Julius Baer says, is a capital protected gold fund.

Since its launch in October of last year, Julius Baer’s original Physical Gold fund has built up $1.7 billion in assets under management, and as at 24 July its US share class had returned 32.86 per cent.

This unprotected version of the fund was made available through Canada Life International in June, and the structured version of the fund is now available on all of CLI’s platforms until 14 September.

“Investors are increasingly turning to gold as a strategic asset allocation play to improve the risk/return profile of their portfolios. This product enables investors to achieve this objective without concern over the possibility of a fall in the gold price… the low cost of this product will enable investors to capture the majority of upside performance with very limited downside risk, " said Stephen Moore, executive director and head of UK Sales at Julius Baer International.

The fund’s base currency is the US dollar, with currency-hedged sterling, euro and Swiss franc share classes available. Capital protection will be provided by Nomura.