Barclays has launched its first structured fund in the Hong Kong retail market, with an open-ended fund linked to the returns of a basket of 20 stocks in the oils and gas, energy, utilities and basic materials sectors.
A spokesman for the firm said the new product represents the beginning of a push in the territory following an initial equity-linked note launched in September 2005.Power Select Income Fund aims to generate long-term stable returns by combining an options strategy with a trading strategy targeting stocks with high expected dividend payouts. The fund pays a fixed 9.8%, paid quarterly, in the first year and limits downside risk thereafter with a written options strategy. It expects to at least match the 9.8% in subsequent years.
The options strategy combines income-generating written calls with bought puts to limit the downside of each stock to 10% each quarter. Further income derives from dividend payments.
Barclays Capital director of investor solutions Wendy Kwan said the fund’s low volatility should help stabilise an investor’s entire portfolio.
Last June, Kwan joined Barclays as local head of third party distribution from Deutsche Bank where she was head of retail distribution.
The bank launched ten structured funds in Singapore last year, though it had initially expected Hong Kong to be its first south East Asian base for structured products. An expected series of products under the Innobond name was restricted to a single issue, however.
