Jupiter Asset Management is planning to hedge its exposure to equity volatility during the pricing period of its next structured product. The second tranche of Jupiter's synthetic zero-dividend preference shares product (DW, 9/17), will launch in January. Jupiter will look to tweak the structure to improve on the first issue, said Richard Pavry, director at Jupiter in London. The price of the first tranche in September was not as favorable as the indicative pricing in the marketing material because of an upswing in volatility at launch, explained Pavry.
The first tranche of the product, wrapped as a closed-ended fund, raised around GBP150 million (USD279 million). The structure is designed to replicate the payoff of zero-dividend preference shares issued by split capital investment trusts. Split capital investment trusts are being run down after losing money and the favor of investors when the stock market bubble burst in 2000/2001, but asset managers say there is still demand for payout profiles based on the ZDP share class.
