Guaranteed Products in Europe: New Products, New Strategies

Boston, MA - 25 July 2007

At 40%, equities make up the largest percentage of assets under management in Europe; however, the figure is relatively low compared to the U.S. market due to the popularity of guaranteed products in that marketplace.

A new Impact Note from Aite Group, LLC examines the changing face of the guaranteed product market in Europe, and looks at how current market conditions, particularly in France, Italy and Spain, are shaping the way these popular products may change in the near future. With less than half of European investors now allocated to equity, many investors have begun to turn to guaranteed products again for their combination of security and reasonable returns.

Guaranteed products have maintained their popularity in recent years, even as newer and more exciting products have become available. However, even these products are different than they were even a few years ago. In several countries, they now offer a blend of traditional fixed-income (to guarantee the capital) with alternative investments, including hedge funds, to provide a greater up-side.

"While asset managers view guaranteed products with curiosity, they provide a safe and simple investment to mass-market retail investors that are leery of cutting edge products market," says Phillip Silitschanu, senior analyst at Aite Group and author of the note. "Now that these products are incorporating alternative investments into the mix, institutional investors are increasingly looking to guaranteed products as a means to match their liabilities."

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