KBC Asset Management has entered an equity swap for a new capital guaranteed product that is being launched this month. The fund, called KBC Click Europe Reverse 3, has a maturity of two years and three months, said Lode Roose, product development manager in Brussels. Investors have a maximum payoff of 60% of the value of the fund, but the payoff is diminished at the same rate of monthly decreases in the Dow Jones EURO STOXX 50 Index.
In the swap, KBC receives the pay out of the fund and pays a Euribor-based rate. The firm sells a series of puts with a global floor--meaning that if the index falls below 60%, clients initial investment is not eroded.
There has been demand from investors for defensive funds with a short maturity, according to Roose. He estimated that the fund would raise approximately EUR30 million (USD29.4 million). He would not reveal the counterparty on the swap, but said that the firm chooses counterparties based on an internal rating system that assesses the quality of service provided.
