Japan's Nikko Cordial has raised $1bn for four structured product tranches sold in the last three months, SRP has learned.
The firm raised JPY25.1bn ($260mn) for a ten-year CPPI issued in December linked to the DJ Industrial Average and JPY42.8bn ($440m) for a similar AUD-denominated Nikkei225 fund, in January. In February, two tranches of a ten-year soft-protected tracker with an optional knockout feature linked to the Nikkei225 gathered nearly JPY28.4bn ($290m). The products are managed by Citi stable mate Citigroup First Investment Management.
"The products were targeted at investors who have an optimistic view of the market and are seeking returns with minimum risk," said Ayumu Sakurai, head of asset management products at Nikko Cordial Securities, which sold the product via its branch network.
He said the February Nikkei products were helped by a feature, which sets the initial strike as the cheapest price during the first month. "Since most of the Japanese companies' fiscal year ends at the end of the March, investors foresaw that the market would be volatile," he said.
Sakurai said it usually offers traditional investment trusts, but recently has been offering unit-based structured products with Citi to combat highly volatile markets. He also noted that the transparency of funds means they are able to reach a broader investor base than notes.
In the near future, Nikko Cordial believes some form of capital protection will continue to be important and the firm is currently offering a four-year protected tracker linked to the FTSE Xinhua A50 China.
Sakurai is optimistic that the fund will reach its target of JPY20bn: "Nikkei 225, Dow Jones and Chinese stocks are favorite underlyings for Japanese investors. We have issued products linked to Nikkei225 already in January and February, so we wanted a change." He added that the Nikko aims to offer transparent, simple and easily understood products.
These products appear in Recent Additions (Japan).