Harewood Solutions, part of BNP Paribas, is to launch an absolute return-themed structured product this month after a reported growing interest from investors.
Ryan Rogowski, the head of Harewood Solutions, says: “The way we put together all our products is based on the feedback we get from investors.
“The main feedback we have received is that people want capital protection and they want some sort of true absolute return.”
Many investors have been disappointed by their forays into fund of funds to give them diversification, he says.
“People were generally unhappy with a lot of their investments in the fund of funds sector” says Rogowski. “We worked with trading and structuring and came up with a product that fitted their demands.”
The Platinium Absolute Return fund will provide exclusive access to the BNP Paribas Platinium index, which offers diversity through an equity arbitrage, commodity, foreign exchange and a volatility strategy.
It will have a six-year life and offers investors 100% capital protection at maturity, backed by BNP Paribas and further collateralised with AAA-rated G7 government bonds.
It also offers about a 200% upside participation, locked-in annually, to give investors double the return of the Platinium index, providing it is positive.
“We’re using four main strategies employed by hedge funds, giving investors exposure to these without the double layer of fees and in a very risk-controlled manner,” says Rogowski.
Since the index was launched in 2001 it has produced annualised returns of 8.5%.
Rogowski’s claim that investor demand for the absolute return theme is growing throughout the asset management industry is attested to by the range of such products entering the market, including Tim Russell’s Cazenove UK Absolute Target Return fund, launched on July 18.
Last week Insight Investment appointed Sonja Uys product specialist for absolute return strategies. Uys joined from JP Morgan, where she marketed derivatives transactions.
She will focus on boosting the company’s presence in the absolute return sector.