Dresdner Kleinwort Wasserstein (DrKW) is introducing a Tracker Certificate linked to the hedge fund asset class - a first in the UK covered warrants market.
Shahzad Sadique, DrKW's UK Head of Covered Warrants, said: "Our new product has all the attributes normally associated with covered warrants including price transparency, daily liquidity guaranteed by London Stock Exchange regulations and tradability. Thus for investors wanting exposure to the hedge fund universe our Tracker Certificates represent an attractive opportunity."
From 27 October 2004, the bank is offering a 3-year Tracker Certificate based on the HFRX Global Index as the underlying asset class. The Tracker Certificates will be available to private investors through their stockbroker. The minimum trade size is one Certificate.
DrKW launched its initial line of UK covered warrants in February 2004 with warrants covering the FTSE index and UK bluechip stocks (Astra Zeneca, Vodafone, Prudential, Unilever, HSBC and Shell). It has since added further major UK stocks and index warrants to its range as well as warrants based on commodity and currency asset classes.
John Godden, Managing Director of HFR said:"This is an important milestone in increasing the accessibility of hedge fund returns to a wider investor community. HFR is pleased to be working with DrKW to deliver these products in the UK given our successful track record teaming with Dresdner in other countries, including Germany and most recently Switzerland, where similar product initiatives have been well received."
Covered warrants are securitised obligations to be fulfilled by the issuer. They give the holder the right but not the obligation to buy (call) or sell (put) an underlying asset at a specified price (the strike price) during or at the end of a specified time. The UK Covered Warrants market was launched by the London Stock Exchange in November 2002. DrKW entered the market in February 2004 becoming the fifth overall issuer of UK Covered Warrants products.
Certificates are another form of securitized derivative, which belongs to the same family as Covered Warrants. They are distinguished by having a zero strike price in the case of call warrants.
In Germany, DrKW's parent Dresdner Bank offers a range of over 2,500 warrants including products based on underlying assets such as shares, bonds, interest rates, commodities, currencies and financial futures as well as basket and bespoke tailored products. With a significant presence in other established warrants markets such as France and Switzerland as well, Dresdner Bank is one of the leading Covered Warrants issuers in continental Europe and trades a total of more than 5000 warrants and other securitised products internationally.