Liontamer has been established by Laetitia Peterson, who was one of the people responsible for Bank of New Zealand’s capital protected products, and Michael Lodge who heads Fund Distributors.
Lodge says capital protected products have seen huge growth overseas, particularly because international equity markets have been taking a battering for the past three years.
“Capital protected products dominate the investment scene in Europe. They now account for the vast majority of flows into investment funds,” he says.
The limited number of offerings made in New Zealand have been well-supported also. Among the players in the New Zealand market are OM Strategic with its OM-IP series of funds, Macquarie with Highpoint and Titan, Forsyth Barr with Gems, and Bank of New Zealand and Westpac with capital protected term deposits.
Lodge says Liontamer isn’t competiting with either OM-IP or Titan as they are more hedge fund strategies. Rather it is up against the likes of Highpoint and Gems.
Instead of using hedge funds each Liontamer trust is fully invested in equity linked notes issued by Morgan Stanley. An equity-linked note is an unsecured debt security fully repayable by Morgan Stanley at maturity.
Lodge describes the capital protected funds as an enhanced version of an index fund. Investors get to participate in the upside but don’t have any downside risk.
For instance Liontamer’s first fund tracks the MSCI and investors get to participate in 100% of the index’s upside, yet the intitial capital is also protected.
While Liontamer intends to continuously roll out funds, the terms of each offering (how much of the upside investors participate in) will vary depending on factors such as the length of the fund.
The funds are “tax-effective” as they are Australian domiciled unit trusts and will make returns to unitholder through the distribution of tax-free bonus units.
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