Société Générale is planning to issue a seven-year capital-guaranteed note next month that will be linked to funds at four large European fund of funds firms. The Diamond First-Class Notes 2011 will allocate to five strategies offered by Capital Management Advisors, EIM Group, Olympia Group and Unigestion.
Although other banks have offered structured products based on funds of funds in the past, this appears to be the first time one features four large funds of funds players, said Antoine Prudent, head of product development at Unigestion. "This is the first time we are actually teaming up with our competitors, which is interesting. It is good for the client and makes sense from a diversification point of view," said Prudent.
The note will invest 25% of its capital in multi-strategy portfolios run by CMA, EIM and Olympia, according to an SG document. The remaining allocation will be invested in Unigestion's defensive and long/short equity funds. This is the combination of strategies that Unigestion generally recommends to its clients because it provides both correlated and non-correlated positions, explained Prudent. The product will be offered in both U.S. dollar and euro share classes, added Marcos Camhis, coo of CMA.