PT  - JOURNAL ARTICLE
AU  - Harry M. Kat
TI  - Equity-Linked Savings—Part I
AID  - 10.3905/jai.2001.318985
DP  - 2001 Mar 31
TA  - The Journal of Alternative Investments
PG  - 29--36
VI  - 3
IP  - 4
4099  - https://pm-research.com/content/3/4/29.short
4100  - https://pm-research.com/content/3/4/29.full
AB  - In this first part of a two-part article, the author reports on a new class of derivative products that he refers to as equity-linked savings products. Equity-linked savings products require investors to pay periodic installments in return for a predefined equity-linked payoff at maturity. The structuring, hedging, pricing and marketing of a variety of equity-linked savings products are discussed in detail, paying particular attention to the case of The Netherlands where equity-linked savings products are currently very popular with an estimated USD 2 billion issued over the last three years. Reverse engineering of a recent issue shows that the profit margins that product providers may be able to achieve on equity-linked savings products are extremely high.