Macquarie launches new capital protection product

Macquarie Global Investments has launched another capital protected product in response to demand from advisers.

The Winton Global Opportunities Trust 2 combines long-term performance of UK investment manager Winton Capital Management Limited with capital protection at maturity, Macquarie stated.

Macquarie Global Investments executive director Peter van der Westhuyzen said while there has always been a strong demand for capital protection for people investing into a particular structured product, they have seen more queries about more diversified investment types from those in different phases of their financial lifecycle, both accumulation and pension.

Van der Westhuyzen said recent feedback from advisers related to two specific needs, wealth preservation and regaining the wealth lost during the global financial crisis.

“People have been very keen to make sure they don’t lose further wealth, so that’s where wealth preservation has been quite a focus through capital protection,” he said. “But we’ve also seen that where people have lost some of their wealth, capital protection has given them the ability to take on more leverage to rebound.”

He said eligible investors could access capital protection products using a 100 per cent loan, which would enable them to achieve higher returns.

Van der Westhuyzen said demand for capital protection products is expected to be a continuing trend, although investors would be more selective.

“If they don’t like the underlying investment, even if it does have capital protection, they won’t proceed,” he said. “If you are able to get the underlying investment right, and add capital protection, then you are on a winner.”

However, he said Macquarie is engaging in an information drive to give advisers the requisite knowledge so they can adequately educate their clients about the product.

“Firstly, there is certainly an increased thirst for knowledge, but secondly, we don’t want people investing into our products unless we have a good sense that they understand what they are investing into. We want to have a long-term business and ensure people have a good experience with our products.”

Van der Westhuyzen said the new trust builds on a successful relationship with Winton, and they expect it to be the first in a range.

He said the differentiator of the Winton trust is that they are using a new protection structure called Variable Portfolio Protection Insurance (VPPI), which is a slight change from what people are used to with Constant Portfolio Protection Insurance.

“We know that there has been an element of tailoring in the way this protection cover has been put together for Winton, and it will certainly provide the best potential for investors to achieve returns,” he added.