Chile's leading structured products bank, Banchile, has applied a new structuring strategy to its Booster China and Booster India funds. The products have been registered with the local regulator as funds aimed at qualified investors, a classification new to the structured fund market but which is used fairly often for regular funds.
A qualified investor fund does not have to observe the limits of 15% per derivative provider, and/or 10% per structured note provider, imposed on regular structured funds, which Banchile portfolio manager Alexander Hazbun told SRP slows down the structuring process: "You have to find ten or more counterparties to complete your position," he explained. The issuer of a qualified-investor fund, by contrast, can use just one provider if it is convenient. Thus, the structuring process is faster and portfolio maintenance less complex.
Qualified-investor funds are only available to individuals or institutions with no less than UF10,000 invested in securities open to public offer, either in Chile or offshore. The UF, Unidades de Fomento, is an inflexion-linked index with a current value of CLP20.80 ($0.04).
Booster China and Booster India are linked to the iShares FTSE/Xinhua China 25 Index Fund and the S&P CNX Nifty Index, respectively. They will feature enhanced participation on the upside, with a cap, and some downside protection with capital at risk thereafter. Participation and buffer levels will be confirmed at the offers' close.