A potential backlash

Capital-guaranteed funds have been the equity derivatives success story of the past few years. But with stock markets rallying, those funds still offering low participation in the equity markets run the risk of a retail investor backlash, writes Nick Sawyer

Take a quick walk around the commercial banks in central Hong Kong, and one thing quickly becomes very clear. A wide range of capital-guaranteed funds is still being sold, and judging by the sales figures, are still being snapped up by retail investors. Principal-protected products may have dropped below their 2001 peak, when they accounted for over 90% of the territory’s total net mutual fund sales, falling to around 35% currently, but they still managed to draw close to $3 million