Societe Generale has extended its socially responsible investing (SRI) and environmental, social and governance investing (ESG) offering for German and Austrian investors with two new outperformance certificates offering 250% and 350% participation on the performance of the Finvex Ethical & Efficient Europe 30 Index.
"The ongoing, increasing demand for SRI/ESG investment solutions made us think of smart structured products for our clients that would leverage on our experience, both as a structurer and a pioneer in socially responsible investment," said Peter Boesenberg (pictured), a director at Societe Generale. "As demand for SRI/ESG investment opportunities is increasing, this stipulates the need of a wider variety of structures that reflect the potential underlyings, such as the Finvex Ethical & Efficient Europe 30", said Boesenberg. "Outperformance levels of this magnitude [250% and 350%] are attractive to investors who have a positive outlook on socially responsible investing."
SG is also concentrating on fixed income to diversify its product palette, according to Boesenberg.
The outperformance certificates will enable investors to get enhanced and unlimited exposure to the positive performance of the undelrying's price, while offering one-to-one participation on the downside, and are characterised by the enhanced tracker payout. In a combination with the capped call payoff, the latter is also used to describe enhanced structures with a limit in the participation factor that are commonly known in the market as sprint certificates. Since the start of 2016, there have been 353 outperformance certificates and 1,360 sprint certificates linked to country and regional indices such as the Eurostoxx 50, Dax, Eurostoxx Banks, Stoxx Europe 600 Oil & Gas, and Ibex 35, according to SRP data.
The new index, which comprises the 30 largest European companies with an ESG operations model, has been a staple in the bank's range of environmental notes (Nachhaltigkeitsanleihen) since both companies launched a strategic partnership in 2014. The index has been live since July 1, 2014. Historical index values date back to January 4, 2006 with a value of 1,000. The index closed on March 23, 2017 at 1,854.57 points.
SG has issued 23 Finvex-linked products since August, 2014, other than the two newly trading outperformance certificates, featuring capped call (eight products), uncapped calls (14 products) and enhanced tracker (one product) payoff profiles, according to SRP data. The Finvex Ethical & Efficient Europe 30 Price Index has featured in 35 structured products in Europe, all of which are still live.
Of the products issued by SG and Finvex, the Sustainable & Efficient Europe 30, which tracks the performance of 30 equally-weighted securities made up of constituents of the DJ Sustainable Europe, is the most popular, according to SRP data. Between December 2013 and March 2016, the index - which has been live since July 1, 2011 - collected sales of €465m from 87 structured products (sold across 18 European countries), of which €200m came from 21 structured products in Belgium. In its domestic market, the index was used in structures from 11 different distributors, including AG Insurance, Axa Belgium, BPost Bank, Crelan, Deutsche Bank, Puilaetco Dewaaij and VDK Spaarbank. The index also achieved healthy volumes in Finland (€76m from 20 products) and Ireland (€50m from 16 products).
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