Monday, September 29, 2008

AXA Secure Ascent 2020 and Fortis Bank

I bought the above product under recommendation from my trusted financial advisor. This product is NOT capital-guaranteed. The attractiveness of this product is that it allows the investor to enjoy a low-risk investment, yet exposed to high absolute returns from derivatives investment.

In summary,
i) when it matures, the payout is at the highest price during its course before maturity.
ii)a mix of a large percentage in fixed income products and a small percentage in leveraged equity product. The leveraged equity product is vested in derivatives (ABN AMRO International Derivatives Fund).

The manager of this Fund is ABN Amro Asset Management. It was supposed to be merged with Fortis Investments(owned by Fortis Bank) after ABN Amro's acquistion by RBS, Fortis and Santander. I was quite worried when I heard that Fortis was bailed out by the government. Will this product suffered the same fate as DBS high notes and minibonds offered by Lehman Brothers? I sms my advisor on this and is still waiting for his reply.

In the meanwhile, I did some readup on the Fortis issue. Fortis announced that they are selling their stake in RFS holdings (set up by RBS, Fortis and Santander to acquire ABN) excluding Asset Management which has already been transferred in the 2nd quarter of 2008. Effectively this means that this product is still managed by Fortis...... Is this bailout sufficient for them to stave off the fate suffered by Lehamn Brothers? Finally, is my investment safe with them?

Link to Fortis's government bailout:
Governments of Belgium, Luxembourg and the Netherlands invest EUR 11.2 billion in Fortis

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