KBC Asset Management, with EUR60 billion (USD53 billion) of assets under management, is structuring a capital-guaranteed product with an embedded lookback option, as European retail investors look for conservative investment products. Lode Roose, product development manager in Brussels, said the asset manager is structuring nine-year notes based on an underlying basket of 20 European and U.S. value stocks. The notes are 100% capital guaranteed and give investors 110% of the basket's gains.
Roose explained the asset manager places investors' cash in term accounts and uses the interest to buy the lookback options from a handful of counterparties, whom he declined to name. KBC started marketing the fund earlier this month and it will be open to investors until the end of the month. The starting point will be determined by the basket's lowest daily level in the first six months of next year. Despite recent gains in worldwide equity markets, KBC is offering a lookback option because "investors still have some uncertainty about when they should enter the market," he said. Deutsche Bank has also structured a lookback note for the same reason (DW, 11/19).
The basket of stocks includes a wide variety of names, including Germany's Continental, the U.K.'s United Utilities, the Netherlands ABN AMRO and Philip Morris from the U.S. He said these companies are mature and stable and to structure a lookback option on high-growth companies would have been too expensive or would have limited investors' participation in the upside. KBC plans to sell a minimum of EUR10 million (USD8.9 million) of the product, known as the KBC Equisafe Value Stocks Best Invest 5, to Belgian retail investors.
