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Cazenove adds structured plan to diversity deal

Cazenove Capital Management has added a structured product to its multi-manager diversity plan as it looks to capitalise on the alternatives’ sector in the coming year.

The BNP Paribas six-year autocall pays an annualised coupon of 18.4 per cent on the plan if the FTSE 100 index does not finish below its strike price of 3,861 at its first year anniversary.

If the index finishes lower but not by more than 5 per cent, the product rolls into the second year. If the FTSE then finishes above its original strike price at the plan’s second-year anniversary, the coupon returns two times 18.4 per cent.

Head of multi-manager Marcus Brookes says: “October was a truly dreadful month for all asset classes but even this presents some opportunities. Increased volatility in the markets meant the coupon, which had been trading at around 12 per cent, shot up to 18.4 per cent and that is an except- ional coupon to be able to get.”

The product provides 100 per cent capital protection unless the FTSE 100 falls by more than 50 per cent, when capital is lost on a 1:1 basis.

Brookes says structured products would not be suitable for either of Cazenove’s index-benchmarked funds, the multi-manager UK growth fund and multi-manager global ex UK fund, as they both have a defined equity focus but it is something they are looking at “very closely” for the multi-mana- ger managed equity fund.

He says: “Buying traditional equities and bonds is probably not the best area for clients over the next year although corporate debt could be a very good opportunity. Government debt could be disastrous, equities could be okay next year but they do not look like they will roar away so with that, backdrop alternative investments such as structured products could be another opportunity to make money.”

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