Finland's Sampo Life has launched a guaranteed investment product for the domestic institutional market and has outsourced the investment management to Union Bank of Switzerland.
This is the first time that domestic corporates, municipalities and associations have had such a product, which includes tax advantages and is denominated in Finnmarks. It could be of interest to pension fund portfolios, though it was not designed with them in mind, says Janninca Fagerholm, vice president, investment unit, of Sampo Life in Helsinki.
UBS will provide the weighted return of the indices for Japan, US, France, Germany, UK, Switzerland and the Netherlands. The final value of the indices will be calculated as an avaerage of the previous 18 months. The ups and downs in stock prices which may occur towards the end of the investment period will not have and excessive effect on the return," says Matti Rantanen, managing director of Sampo Life.
The contract provides a guaranteed return over seven years of at least 1.89% per annum, provided the investor stays in until 2004. The minimum investment is FIM30,000 ($ 6,000) and the issue is limited to FIM50m.
"We chose UBS as we wanted a partner that is very highly rated here," says Fagerholm. "In addition, UBS has a lot of experience in this field, having done products like this in the UK and other Scandinavian countries."
It was arranged through the UBS global equity derivatives section in London."