Forsyth Partners, an independent financial services group, and KBC Financial Products have structured an innovative investment product based on Forsyth's alternative strategies fund. The structure, dubbed Forsyth Five Year Generator Note, offers investors a possible annual coupon over the five-year term, as well as the growth of the basket at maturity. The generator note uses constant proportion portfolio insurance to dynamically manage investors' exposure to the Forsyth fund and to bonds. The five-year term is set to begin on Aug. 31.
The note has a guarantee from KBC Bank to return investors' capital. Rivals said the product is noteworthy because it offers investors a coupon representing 50% of the fund's growth, providing there has been a minimum of 25% growth.
Demand for the capital-protected product has been strong, in spite of evidence that hedge fund managers have struggled in recent months to generate returns, noted Rossen Djounov, managing director-institutional sales at Forsyth Partners in London. Djounov said, "Forsyth has worked with KBC on both its structured products to date but it is talking to several market players about its next product." Forsyth will start researching its next product in September, added Djounov.
