Natixis has licensed the new Euro iStoxx 50 Style Weighted Decrement Indices to be used as the underlying of a new undisclosed structured product. The new, smart beta benchmark was launched on Wednesday (July 8) alongside the Euro iStoxx 50 Style Weighted.
Natixis is planning to launch a number of structured products linked to this underlying in different formats to cater for investors with different risk profiles, according to Eric Le Brusq (pictured), global head of sales & financial engineering at Natixis. “After multiple demands from clients searching for an alternative to classical indices (capitalisation weighted, equally weighted), Stoxx developed this unique family,” he said. “This new smart-beta solution will provide diversification to clients.”
The Euro iStoxx 50 Style Weighted index, which uses three style factors – value, quality and size – reweights the components of the prominent Eurostoxx 50 benchmark. The index includes all the components of the Eurostoxx 50 but with a weighting scheme that is based not only on free-float market cap but also on a score calculated using style factors.
The new index is derived from the Euro iStoxx 50 Style Weighted index and replicates the return of an investment in the net return version with a constant markdown of 5.5% subtracted on an accrued basis. “Through this unique concept, we offer market participants a smart-beta index based on the Eurostoxx 50 that takes the themes of value, quality and size into consideration,” said Hartmut Graf, chief executive officer, Stoxx. “While the Eurostoxx 50 weights components based on free-float market cap, the Euro iStoxx 50 Style Weighted has an innovative weighting scheme that reflects more than just the size of a company.”
The index is part of a new generation aimed at optimising exposure to the 50 shares which make up the Eurostoxx 50, in order to favour Eurozone companies with the best business fundamentals, said Selim Mehrez, global head of equity derivatives, corporate and investment banking at Natixis, in a statement. “The index weightings are computed with a model that analyses the financial structure (profitability, growth potential) of each company in the selection,” said Mehrez. “This index will allow Natixis to expand the range of investment solutions to both its retail and institutional clients.”
The French bank has been used as a bond provider in 29 products this year, of which 19 were marketed in France, four in Sweden, and one each in Belgium and Japan, respectively. Natixis also appears as the bond provider in four private banking products sold to international investors.
The French bank, which does not have a retail public distribution programme in the UK, has also been active in the UK market with a range of structured private placements under the direction of Lior Abehassera his head of UK & Ireland - equity & fund solutions sales, including a capital-protected notes linked to the Natixis Tars index, a FTSE 100 range accrual note, and a dual index (FTSE 100/Eurostoxx 50) Europe income kickout note.
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