In this week’s roundup we look at the ongoing investigation on ELS by Korean regulators; the latest update on the Allianz structured fund fraud case; three structured ETFs made their debut.
The Financial Services Commission (FSC) and Financial Supervisory Service (FSS) are still ‘reviewing measures to prevent recurrence [by] taking into account the results of the FSS inspection’ over the mis-selling of HSCEI-linked equity-linked securities (ELS), stated the Korean watchdogs on 10 June in a response to an earlier media report.
Earlier that day, local media Maeil Business Newspaper reported that the Korean financial authorities are reviewing a plan to require banks to open a ‘financial investment product-handling window’ at bank branches, which will be implemented as early as the third quarter of this year.
The investment products in scope are ‘high-risk financial investment products’ which are likely to result in a loss of 20% or more of the principal amount. It appears difficult to introduce criteria for ‘qualified investors’ when it comes to ELS, according to the media report.
‘The specific details and announcement plan for preventing recurrence have not yet been confirmed, so please be cautious when reporting,’ the Korean regulators sent a caveat.
Ex-CIO of Allianz Global Investors US pleads guilty
Gregoire Tournant, former CIO of Allianz Global Investors US (AIG), has pled guilty to investment adviser fraud for a series of private investment funds managed by two former portfolio managers at the firm, who had pled guilty. He is scheduled to be sentenced on 16 October, according to U.S. Attorney's Office, Southern District of New York. Previously, AGI had paid a total of US$5.4m to victims and the US government.
Between 2014 and 2020, Tournant was the CIO of a set of private funds at AGI known as the Structured Alpha Funds, which were marketed largely to institutional investors, including pension funds.
The three employees ‘misled these investors about the risk associated with their investments’ by providing them with altered documents to hide the true riskiness of the funds’ investments, including that investments were not sufficiently hedged against risks associated with a market crash.
Due to market declines in March 2020, the funds lost in excess of US$7 billion in market value, including over US$3.2 billion in principal and were ultimately closed.
Leonteq launches collaboration with neon
Leonteq has entered into a collaboration with neon Switzerland AG (neon) under which neon will offer the ETP+ on the FuW Swiss 50 Index NTR to their clients as part of the recently launched investment plan without purchase or deposit fees.
As a challenger of traditional Swiss banking, neon offers a user-friendly account and investment solution as an app for all smartphones. Over 200,000 customers currently use neon’s services making neon the most widespread, independent Swiss solution for a low-cost, smartphone-based payments account.
The collaboration between neon and Leonteq aims to address a new growth market for investment plans in Switzerland. In this context, Leonteq recently launched a dedicated ETP+ on the FuW Swiss 50 Index NTR to enable monthly investments by neon customers in small sizes.
'Our shared goal
The FuW Swiss 50 Index NTR is developed by the editorial team of Finanz und Wirtschaft (FuW) and includes the top 50 tradable Swiss companies. Every six months, the companies in the index are selected according to their free float market capitalization and considering minimum liquidity requirements.
Manulife IM launches two enhanced yield ETFs
Manulife Investment Management has listed two actively-managed Manulife Smart Exchange Traded Funds (ETFs) on the Cboe Canada exchange. The new ETFs, the Manulife Smart Enhanced Yield ETF (CYLD) and the Manulife Smart US Enhanced Yield ETF (UYLD) (and UYLD’s hedged, unhedged and USD units) aim to deliver exposure to dividend securities and covered-call strategies to provide investors with multiple income streams. They’re managed by the Canadian firm’s multi-asset solutions team and its systematic equity beta team.
CYLD aims to provide a steady flow of income and long-term capital appreciation by investing primarily in a diversified portfolio of Canadian dividend-paying securities. Meanwhile, UYLD possesses a similar investment objective for US dividend-paying securities, also distributing income monthly.
‘Utilizing a proprietary call-put strategy, the [two new ETFs] can be useful solutions for advisors and individual investors alike to gain some equity exposure upside while mitigating downside market risks,’ said Mark Bankay (below right), head of ETFs at Manulife Investment Management.
REX Shares launches covered call ETF on BITA index
Miami-based REX Shares has introduced the REX AI Equity Premium Income ETF (Nasdaq: AIPI), which is designed to provide exposure to leading artificial intelligence (AI) companies while aiming for an enhanced monthly income using an advanced covered call strategy.
The exposure is excessed through the BITA Leaders Select Index, which includes pioneers in AI hardware, software, infrastructure and services. Utilizing a covered call strategy, AIPI sells out-of-the-money (OTM) call options to help generate income from premiums which also allows for potential appreciation in the AI sector.
AIPI marks REX’s second venture into covered call ETFs after the FANG & Equity Premium Innovation Index ETF (Nasdaq: FEPI), which has accumulated over US$225 million in AuM since its inception in October 2023, according to the ETF provider.
Calamos debuts Nasdaq 100 Structured Alt Protection ETF
Chicago-based alternatives manager Calamos Investments has listed its Calamos Nasdaq 100 Structured Alt Protection ETF (Ticker: CPNJ) on NYSE Arca, with an 9.83% to 10.33% cap range delivered over a one-year outcome period, before fees and expenses.
As the second fund in Calamos’ Structured Protection ETF lineup, the new offering uses Flex options to construct a capital-protected strategy over the outcome period from 3 June 2024 to 30 May 2025. To be reset annually, the fund has the reference asset of price return of Invesco QQQ Trust, Series 1, based on the Nasdaq100 Index.
'We achieved rapid success with the launch of the Calamos S&P 500 Structured Alt Protection ETF - May, due to its innovative ability to provide capital-protected exposure to the globally recognized S&P 500 Index,’ said John Koudounis (right), President & CEO.