MeesPierson Private Bank has started marketing its first capital protected real estate fund and opted to use a portfolio threshold method rather than options to provide the money-back guarantee. Koen Zoutenbier, director in product development, said the fund offers participation in a basket of six real estate funds with step-up capital protection starting at 100%.
Zoutenbier said it opted to use a constant portfolio proportion insurance (CPPI) structure, in which capital is transferred between the underlying funds and risk-free bonds depending on the performance of the funds and interest rates, because it allows investors to capture the dividends in the underlying funds. He added that in option quotes MeesPierson received the dividends were forecast at much lower rates that Zoutenbier was predicting.
The bank is offering the structured product in EUR1,000 (USD1,219) denominations even though it's aimed at high-net-worth individuals because Zoutenbier sees this as making up a small part of an individual's portfolio.
The fund was launched in the middle of last month and MeesPierson is in talks with the Spanish regulator about offering it in Spain, noted Zoutenbier. It has a UCITS III (Undertaking for Collective Investments in Transferable Securities) wrapper, which means it can be offered across Europe with relative ease.
MeesPierson chose to launch the structured product with UBS because of the Swiss bank's knowledge of the high-net-worth market and UBS Global Asset Management's relationship with the underlying funds. The funds cover both the European and U.S. real estate markets and also have exposure to residential and commercial property.
