Kleinwort Benson Private Bank has launched a structured investment product that gives the investor capital protected exposure to a range of managed funds through an exotic call option. The novel feature is a fund 'reserve list'. On annual review dates, poorly performing funds can be substituted with funds from the reserve list, creating the effect of an actively managed fund portfolio.
The underlying funds fall in to five different baskets; 50% in U.K. equities, 20% in sterling bonds and 10% in each of U.S. equities, European equities and Japanese/Asian equities. The weighting of the baskets also replicates a managed portfolio of funds, explained Jonathan Kent, deputy chief investment officer in London. Kent declined to name the counterparty providing the protection and the call option, but noted it is rated AA minus by Standard & Poor's.
