PanEuroLife, a Belgian insurance company, has bought a derivatives fund structured by Société Générale. The fund, dubbed Harmony Fund II, is based on 20 global stocks and has a guaranteed coupon of 5% in the first two years, but no capital protection. In the subsequent six years of the investment product worst-of options are used to create a payoff based on the two worst performers in the fund.
"There is more demand [in Belgium] for guaranteed coupons than capital guarantees," noted Judith Gledhill, v.p. of marketing at PanEuroLife in Luxembourg. She expects to raise EUR30 million (USD36 million) for the fund, which is targeted at retail investors in Belgium and distributed through financial advisors. PanEuroLife will look to open a new fund when Harmony Fund II closes in August, said Gledhill.
