Want to make a bet on the volatility of the Kospi 200 index, tracking blue chip Korea? I'll promise you $71 in 3.9 years' time, provided the Kospi 200 trades flat or up on a month-to-month basis. But if any given month it trades lower, the percentage it loses is deducted from your 71 bucks. To make it sporting, because Korea is among the most volatile markets in the world, we'll put a floor on any given month's loss of 5%, or $5. So what are the odds over the next 46 months that you'll collect something?

This is the 'bonus' linked to ABM Amro Asset Management's latest capital-guaranteed fund, launched in Hong Kong to coincide with the inauguration of South Korea's new president, Roh Moo-hyun. It is an extra lure on top of a 104% capital guarantee upon maturity of the Korea Bonus Fund.

Some guaranteed funds will give investors a share of the upside of the underlying index, should it outperform. But it is becoming difficult for fund managers to make money on these products, so ABN Amro opted to scrap that and tack on the bonus system instead. Only 1-3% of an investor's money goes to options on the Kospi 200. Most of the investor's money, 92-93%, goes to bonds, while 5-6% goes to various fees. The 104% return plus any bonus is guaranteed by AA-rated ABN Amro Bank. Some 20 retail banks will distribute the fund. Clearly the distributors think the aura of Korea's economic growth story, plus a guarantee a nudge above bank deposit rates, will be enough to convince Hong Kong retail investors to take that bet against volatility. If it doesn't work out for the investor, they still get 104% back after nearly four years, but at 5-6% fee levels, it's an expensive guarantee.