The move comes just two years after the US$5bn Wall Street collapse of Long Term Capital Management, which sparked a global financial crisis and regulators are still fearful of the risk posed by hedge funds.

Although the UK Financial Services Authority bans companies from selling hedge funds directly to small investors, and refuses to authorise retail hedge funds, there is no doubt that this type of investment vehicle is growing in popularity. They have even been dubbed the "new mutual fund". CSFB says it has found a way to overcome the rules by structuring the hedge fund as a Dublin-listed company, allowing the fund to be marketed in the UK as authorised and regulated. It is seeking approval for the fund from the central bank of Ireland and is already pre-marketing the fund to UK independent financial advisers.

Hedge funds are equated with very high returns. They bet on market movements and there can be billions of dollars involved in one move. The CSFB hedge fund, however, will be different from most, says the company. Unlike hedge funds offered by private banks to wealthy individuals, which tend to have a minimum investment of £150,000 or more, the CSFB fund will start at just £7,000, and will be able to be placed in a tax-free individual savings account.

CSFB vice-president Adam Habib said of the development: 'This is a first in many ways for the retail market place. It is likely to have a minimum investment of £7,000, which is really bringing it to the smaller investor for the first time. It will be authorised, regulated, Isa-able and Pep-transferable.' CFSB also says the fund will be nothing like the Soros-type. It will instead focus on low risk and low volatility. In addition, CFSB says fund management fees will be kept to a minimum.