Principal-protected strategies taking hold

Societe Generale Corporate and Investment Bank, New York, earlier this year launched a $50 million principal-protected strategy for an unnamed US-based pension fund. Societe Generale's Michel Serieyssol, managing director and head of pension solutions, said principal-protected notes offer pension plans a portable-alpha approach that can meet some of the pension liability sensitivities while generating a higher return in their existing portfolios. But the jury is out as to whether capital guarantees are the most effective way for pension plans to invest in hedge funds and hedge funds of funds, in particular. Societe Generale is working on building a US business for capital guarantees on hedge funds. The cost of these guaranteed products is an issue for investors.