Would you like a return that is higher than a building society or bank could offer on your cash?

The answer is obvious — of course you would, but achieving the desired result is not so easy. A golden rule of investment is that if you try to beat deposit interest rates, you have to accept some risk. How to achieve the additional return but limit that extra risk is the key question and it is now being addressed by a new generation of UK investment funds.

These new funds aim to achieve an absolute return, ie a total return that is higher than bank base rates, regardless of investment market conditions. They do not give you a 100% capital guarantee, but their structure and operation are designed to help protect your original investment as far as possible. So the value of your investment can fluctuate and you can lose some of your money, unlike a deposit account. The exact terms vary from one fund to another, but for example, one investment group's absolute return fund has its capital protection backed by its parent, a major German bank. In this case, the capital protection only operates every six months. You can access the funds in the meantime, but if you cannot risk any capital loss during the six-month period, you need to wait for the short six-monthly period of three days when capital security applies.

Absolute return funds are not in themselves new. Funds that target absolute returns have been around for many years, but access to them has largely been restricted to the institutions and the ultra-rich. What has changed recently is that rules for publicly available funds, such as unit trusts and OEICs, have been revised to allow a greater range of investment strategies. The reform has encouraged managers with experience of absolute return funds to make their expertise available to a wider audience. Past performance is not a guide to future performance.

The returns on these funds will never set the world alight — they typically aim for 2% to 3% above banks' base rate — but if they achieve their target, they should provide a better return than deposit accounts, even of the internet variety. But they do not offer the same degree of security. You take on some degree of risk to achieve that higher level of return.

This promises to be a fast-developing area, so for the latest news of what is on offer, make sure you contact us. Not all products and services are regulated by the FSA.