Three new structured capital-guaranteed mutual funds are being marketed in the Chilean retail market, showing the commitment of SP providers for this wrapper type when hedging retail investment strategies.
Banco de Chile’s fund manager Banchile has announced the launch of a new capital-guaranteed investment fund to be marketed among its retail investors.Fondo Mutuo Wall Street 107 Garantizado is a three-year capital-guaranteed investment fund based on a straight uncapped call investment strategy. It guarantees 107% capital at maturity plus participation on the average monthly growth of the S&P100 index during the investment term. The participation level varies between 90% and 110% depending on considerations established in the product’s final conditions. Fondo Mutuo Wall Street 107 Garantizado will be available for retail investors until 3 February 2008.
BBVA’s fund manager is also marketing a new structured capital-guaranteed fund among its clients. Fondo Mutuo BBVA Garantizado Ultra Depósito is a three-year capital-guaranteed structured fund offering a 112% return at maturity plus the difference between 3%, if the variation is positive, and the UF (Unidad de Fomento: a unit of account calculated on a daily basis relative to the Chilean peso. This exchange rate is based on inflation over the last two months, so that the real purchasing power of one UF remains the same but fluctuates relative to the peso). If the condition is not met, the product guarantees 112% over initial investment. Fondo Mutuo BBVA Garantizado Ultra Depósito will be available in the retail market until 11 March 2008.
Finally, Scotia Sud Americano Admisnitradora de fondos mutuos, Scotia Bank's fund managers, just launched a new investment opportunity for retail clients also using a capital-guaranteed fund wrapper to market it. Fondo Mutuo Scotia Garantizado Lockin is a one-year growth product with a cliquet payoff type linked to the performance of the DJEurostoxx50. The product guarantees 100% capital return at maturity, plus 100% of the sum of the monthly performance of the underlying with a 2% monthly cap. The product has a consolidation feature in which, if on any of the observation dates the monthly performance of the index reaches a multiple of 4%, the interest is consolidated and kept until maturity. Fondo Mutuo Scotia Garantizado Lockin will be available for retail investors until 4 March 2008.
According to the figures from Asociación de Administradoras de Fondos Mutuos de Chile (Fund Managers Association), Chile has $25bn of Mutual funds AUM, of which $6bn corresponds to capital-guaranteed structured funds. More than 55,000 retail investors have bet on these products in the Andean country, which offered an average annual return of 9.61% during 2007.
Although there are other wrappers actively sold among private banking investors such as MTNs, structured bonds and certificates, fondos mutuos estructurados (Structured Mutual Funds) have become the most popular wrapper in Chile to sell structured products among retail investors.
