Banchile’s asset management arm is working on a structured product that would offer investors an aggressive but flexible solution to access the returns of the Pimco Income fund.
The Fondo Mutuo Estructurado Deuda Internacional Nivel 100 would invest between 90% and 100% of its assets in structured notes whose underlying asset is Pimco’s $102.5 billion debt fund, run by Citywire AA-rated managers Dan Ivascyn and Alfred T. Murata.
Built for qualified investors, the fund will have a duration of almost two years, according to a document filed by the firm with the Chilean market regulator, upon when investors would receive back their initial investment plus a percentage based on the growth of the Pimco Income Fund.
Banchile could also invest up to 10% of the structured fund's assets in other debt instruments, including foreign bonds.
The structured notes seek to deliver 1.1 to 1.2 times the returns of Pimco Income fund, as long as its returns are positive, Banchile said in the document.
Banchile declined to comment beyond the contents of the document, but Citywire Americas understands the fund will first be made available to Chilean investors.
Banchile has experience with structured products, its fund range already including 10 such vehicles, according to the firm’s website.
However, it appears the new vehicle would be Banchile’s first based on a mutual fund, as the others tend to follow indexes.
Investments in structured products can provide leveraged exposure to an asset to meet the needs of more aggressive investors, as leveraged exposure can allow for the potential of greater outperformance.
Sergio Rivero leads Banchile’s structured products team, which also includes Lucas Fedele and Fernando Galdames.