By ELLEN READ
Another way of making - or losing - money is now available to investors with nerves of steel.
A former currency trader has set up a business to invest and manage foreign exchange accounts for those who can come up with at least $2000.
Offering annualised returns of up to 40 per cent - the company's cut is a quarter of the profits - Currency Concepts director Scott Healy is open about the risks.
The average average return for a balanced managed fund is about 14 per cent.
"We won't accept everyone who wants to invest - you have to be able to stand losing all the money," he said, citing the case of one man turned down because he wanted to invest his children's education fund.
Healy, a former head of wholesale foreign exchange dealing for the National Bank, runs the company with ex-Fonterra chartered accountant Janie Elrick and chairman Edward Harman.
Performance since the company set up last year had been excellent on an annualised basis, said Healy.
"Foreign exchange markets are more volatile than equities and so generate more opportunities to capture movements towards highs and lows," he said.
"As far as we know, no other company in New Zealand offers market access for a minimum of $2000."
But one industry insider with more than 15 years' experience in foreign exchange markets said the projected returns sounded optimistic.
"Over the long run, I would say those returns would be tricky. You could annualise out some of the gains you might make over a day or two on the currency market, but on a yearly basis that's a hard call," he said.
Currency Concepts plans to issue a registered prospectus and become a managed fund in the next year or so - a step planned because Healy said they had been told financial advisers would be happier referring clients if it was officially a managed fund.
The company's operations are already similar to a managed fund - it manages accounts on behalf of its clients to speculate on foreign exchange.
The cash is pooled to obtain wholesale currency rates, but the accounts remain separate.
Fearless investors can ride currency
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