HSBC Asset Management has entered an equity index swap to structure a six-year capital protected fund referenced to the FTSE 100. In the swap, HSBC receives the performance of the equity index and pays the floating rate on a basket of medium-term notes it will buy to provide capital protection, according to James Chu, director of structured products in London.
The fund, dubbed the Capital and Growth Fund, gives investors 100% of the upside of the index, said Bryan Greener, head of product management in London.
The swap will be called at three years if the index has risen by at least 21% and at five years if it has risen by 55%. If the index increases by 21% at the third year, the investor receives 121% of their capital and 155% if it hits the five-year target.
If the index does not reach its three or five-year goals the investors gets 100% of their capital any growth in the index.
