RT Journal Article
SR Electronic
T1 Equity-Linked Savings—Part I
JF The Journal of Alternative Investments
FD Institutional Investor Journals
SP 29
OP 36
DO 10.3905/jai.2001.318985
VO 3
IS 4
A1 Harry M. Kat
YR 2001
UL https://pm-research.com/content/3/4/29.abstract
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.