ABN Amro has launched a capital guaranteed note for HNWIs and private clients. The ABN Amro Prin...
ABN Amro has launched a capital guaranteed note for HNWIs and private clients.
The ABN Amro Principal Guaranteed Currency Note is a combination of two products. Firstly, it is a trading subsidiary that invests directly in foreign exchange strategies or money market instruments.
Secondly, it is a capital protection portfolio which, through hedging, provides a guarantee at maturity. It is domiciled in the Cayman Islands and guarantees 100% of the initial capital invested to the investors on the maturity of the note.
Its investment strategy for choosing currencies looks at three types of input to generate a consensus forecast to buy/sell/avoid a particular currency pairing.
This includes examining price trading, assessing the cheapness or dearness of the underlying interest rates of each currency, and lastly looking at the potential inflation of monetary activity from central banks.
Currency contracts will be mainly by one-month contracts in liquid, fully convertible currencies.
According to Gijs Kaars Sijpesteijn, head of internal fund sales, international private clients at ABN Amro, this form of managed capital guarantee allows for a larger participation of assets to be dedicated to the actively managed currency model. The structure allows for a significant reduction in leverage required to achieve the objective of expected returns, compared to traditional capital guarantee structures, combining zero coupon bond and highly geared passively managed FX option strategies.
He sees an opportunity in foreign exchange as an asset class due to its low correlation with bonds and equities.
The note is for seven years and aims to provide investors with an average net return of approximately 10%-12% per annum while keeping volatility to between 11%-12%.
Minimum investment is $25,000 or E50,000. It is to be sold via ABN Amro's international private banking network, wholesale teams and third-party distributors.
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