U.S. interest in constant proportion portfolio insurance products is being hampered by the tax system. Alice Luong, an assistant v.p. in Ivy Asset Management's structured products group, said gains on the structures are not treated as long-term capital gains, which enjoy a low tax rate, but rather as ordinary income. "I have never had a high-net-worth individual ask for a principal protected note on a fund of hedge funds," reflected Yogesh Attre, a managing director in fund derivatives marketing with BNP Paribas in New York, who puts that down to their tax inefficiency.
Tax Restricts CPPI Demand
