ABN AMRO launches its first guaranteed products in the Far East region
In response to a massive appetite for risk-averse products among investors in the Far East, ABN AMRO is launching its first guaranteed products for distribution in the region.
First to launch will be the China Step-up fund, a Hong-Kong dollar-denominated vehicle which has a guarantee of returning at least the original capital. With a fixed lifespan of 3.7 years it gives exposure to a fixed basket of 15 China-related stocks, which derive a large proportion of their earnings from China. The structure is such that whenever the product appreciates by 10% the relevant profit is locked in.
The second will be the Best of World Guaranteed fund. Here the lock-in period is for four years three months. The guarantee operates so that at final maturity the investor will receive at least $106 for every $100 invested. On top of that they will participate in the upside of a single index over the period; the relevant one being the best-performing of the S&P 500, the EuroStoxx 50 or the Nikkei 225.
Solange Ruchorp, head of product development at ABN AMRO in Singapore, said: 'While as a group we have issued guaranteed products of this type in Europe these are our first issues aimed at the Far East market. Since the end of last year there has been huge demand for guaranteed products as investors have become increasingly risk-averse.'
Such is the demand for protection that investors appear to be more concerned about the level of guarantee than they are about the level of upside participation, Ruchorp believes. She estimates that since the start of the year 95% of fund sales in Hong Kong and Singapore have been of guaranteed products.
The group has plans to launch a number of guaranteed products going forward. Unlike the present offerings, Ruchorp thinks future launches are likely to be based on existing actively managed funds within the ABN AMRO range.
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