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Investor Economics

Insight February 2011 Monthly Update

Competition on the “downside risk protection/upside return potential” product continuum is heating up. After three years of virtual hegemony of segregated funds and their guaranteed withdrawal benefit (GWB) versions in this space, deposit-takers are once again restocking their market-linked GIC (MLGIC) and principal-protected note (PPN) shelves to capture the assets looking for market exposure with a safety net. Driving this renewed interest is the deposit-takers’ desire to retain and develop relationships with the leagues of Canadian households that fled to the safety of savings deposits during and in the aftermath of the 2008 bear market.

The February 2011 issue of Insight documents the recent growth spurt of the MLGIC category, highlighting the key factors behind the uptick in product launch activity and rising balances. Set against the backdrop of the expansion of deposits and market-linked instruments (MLGICs and PPNs), our investigation of this product segment includes in-depth views of the asset class, product features, account balance segmentation, maturity, the competitive field, and prevailing delivery strategies. Having carved out a stable spot on the deposit-takers’ branch shelves, MLGIC sponsors are beginning to consider external channel alternatives, including intermediated advice channels. Our feature research article includes a special featurette on the BMO Lifetime Cash Flow portfolios.

Our Trend Lines article tracks the progress of the rapidly-growing managed yield (or income re-categorization) fund category.

Report Information

  • Tags: investment funds, managed yield, market-linked GICs, mutual funds, principal-protected notes

  • Date Posted: February 25, 2011