Salomon Smith Barney Australia started marketing today the first capital guaranteed product in Australia linked to Asian indices that allows investors to lock-in quarterly gains without downside exposure, according to Luke Randell, managing director of trading and derivatives in Sydney. "It's the first capture-the-peaks market-linked investment of its kind in Australia," proclaimed Randell, adding, "We plan to launch additional products linked to a range of indices as well as individual domestic stocks."
The capital guaranteed note provides a minimum return of 103% and offers upside participation in a basket of four Australasian index funds, calculated by the top quarterly returns averaged over the two-and-a-half year life of the product. The note, with a minimum investment of AUD20,000 (USD10,874) gives the investor between 50-75% of the upside return without any downside risk. Randell noted that Salomon will use over-the-counter options to hedge the product.
An equity derivatives head at a rival firm said, "There's been several of these products done on local stocks and indices but this is probably the first done on Asian underlyings in Australia."
