STRUCTURED PRODUCTS WHAT ARE THEY AND

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  • Pension & Life Fund behaviour is driving Structured products Pension/ Life funds are keen to purchase “precipice puts” to hedge against solvency ratio = SCARP - your clients sell them that protection Explosion in the number of funds, hedge funds, pension and life funds writing covered calls = cheaper call options. Research* has shown buying out of the money puts and selling covered calls is an inefficient strategy
  • Neutralise Currency Risk
  • Market Timing – Soc Gen, FTSE had slid from 6200 and had touched 5,300 and sub prime
  • Playing Spot Commodites –now sold for a cap prot long short comm funds – returns capped at 20%pa
  • Recognised that Japanese Property looked cheap 16 years of price deflation, and its proximity to China and Asia make it attractive long term No real bricks and mortar funds as yet Bearish on UK property
  • British Telecom/ Cisco/ Daimler Chrysler/Deutsche Telecom/ France Telecom/ Intel/ Nokia/ Vodafone/ Worldcom
  • Efficency
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