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SGAM AI launches three ETFs on Borsa Italiana

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SGAM Alternative Investments is launching three exchange-traded funds on the Milan stock exchange based on the S&P MIB index, a capitalisation-weighted index developed with Borsa Itali

SGAM Alternative Investments is launching three exchange-traded funds on the Milan stock exchange based on the S&P MIB index, a capitalisation-weighted index developed with Borsa Italiana that measures the performance of the broad Italian equity market.

Two ETFs that will offer reverse exposure to changes in the S&P MIB index are the first ‘bear strategy’ ETFs to be launched on the Italian market’s flagship index. The SGAM ETF Bear S&P MIB offers a reverse exposure up to 100 per cent to the S&P MIB Total Return index, enhanced by a monetary return, while the SGAM ETF XBear S&P MIB offers reverse exposure up to 200 per cent.

The ETFs are aimed at institutional investors that do not wish to use futures to follow a bear strategy. They can also be used to hedge a portfolio or to implement a long-short arbitrage strategy between an equity portfolio and the S&P MIB index, in order to extract only the outperformance from the portfolio, independent of the direction of the market.

The funds make it possible to invest in a falling market through a Ucits III fund with reduced costs, since the funds do not charge any entry or exit fees. The ETF performance will be enhanced by a money-market return which can reach twice the Eonia interest rate for SGAM ETF Bear and three times Eonia for SGAM ETF XBear.

The reverse exposure to the index is variable and can be modified each quarter according to the upcoming trend and volatility forecasts of a management committee composed of fund managers and analysts from SGAM Alternative Investments. At the launch date, the reverse exposure to the index is fixed at 80 per cent for SGAM ETF Bear S&P MIB and 180 per cent for SGAM ETF XBear S&P MIB.

The third product is the first leveraged ETF based on the S&P MIB index. The SGAM ETF Leveraged S&P MIB is designed to replicate up to 200 per cent of the gains and losses of the index.

This structured ETF is intended for institutional and corporate investors as well as active and experienced retail investors seeking leverage in a simple and liquid investment wrapper. Based on equity securities rather than derivatives, it can be used notably by institutional investors that are restricted in the use of futures and other derivatives. The fund is also aimed at investors interested in acquiring leverage on the index without taking on additional debt.

SGAM AI launched its first structured ETFs in October 2005 based on the CAC40 Index, were followed by others linked, for example, to the Dow Jones Euro Stoxx 50 and the LPX50 index. By offering leveraged exposure to the Italian index, SGAM Alternative Investments says it is focusing its ETF range more strongly on institutions seeking simple leveraged exposure convenient to trade.

In April last year Borsa Italiana launched a segment devoted to structured ETFs, which have achieved great success in terms of volumes and new listings. SGAM says its arrival with structured ETFs on the S&P MIB index confirms the interest of international players in the Italian market.

Société Générale Asset Management had a total of EUR375bn in assets under management at the end of September, while SGAM Alternative Investments had EUR56.1bn in assets. Based in Paris, London, Tokyo and Hong Kong, SGAM AI Structured Asset Management Group managed EUR44.6bn in guaranteed structured products, structured credit products, index funds and ETFs and dynamic money market funds.

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