Citi VP Emma Davidson said the bank will issue at least one more product from its UK-based fund platform before the end of the year. The team is looking at various options, she said, including an Income Maximiser-type fund but a little cheaper in fees. "Clients like to see income structures," she said, "...but [whatever we do] we will definitely stick with collateralisation, because people like that, and we will stick with defined returns."
The base requirement for any launch is that it should have seed money and distribution, as did the platform's first product, UK Autocall. The Ucits III fund has fallen short of its initial target and has raised around £15m since inception. Davidson said it was an 'eye-opener' to discover that most of the money for the fund has come from discretionary managers and traditional long-only investors rather than from the typical buyers of structured products in the IFA community. Its lesson heeded, the bank now hopes to raise £50-100m before the year is out.
The UK Autocall Fund is a growth fund linked to the FTSE100. If the level of the index on any annual anniversary from the second to fifth is at or above its initial level, the product terminates and offers a capital return of 118.5%, 127.75%, 137% or 146.25%. Soft protection is set at 50%.
When the product autocalls, a new autocall strategy is employed, with barrier levels subject to a minimum of 70% and a maximum of 110% and protection barriers subject to a minimum of 40% and a maximum of 70%.
Up to 20 business days are allowed to determine the strategy's new predefined return, which is subject to a minimum defined return of GBP Libor plus 3% at reset.
The product is collateralised using G7 government bonds. The custodian for the product is JPMorgan Chase Bank and the fund administrator is Capita Fund Administrators. There is an annual management charge of 0.9% pa.
The product was launched early this year.
This product is available on the UK database.