Dutch structured products fund ends activities

Bufferfund has ceased to exist. The Dutch open-ended fund, which invested in bonus- and discount certificates listed in Germany, ended its activities on 31 March 2023, citing disappointing results in recent years and outflows from the fund as the main reason behind the decision.

‘The lack of inflow, which resulted in falling AUM and rising fixed costs, led us to this decision,’ fund managers Marcel Tak and Jan van Rossum stated in the annual accounts.

Since its inception in August 2016, the fund's strategy failed to deliver sufficient results and it was particularly unable to withstand the sharp fall in prices during the corona crisis at the beginning of 2020. Although it did recover considerably since then, Bufferfund’s performance in 2022 – when it achieved a negative result of -10.6%, slightly worse than its benchmark the Eurostoxx 50 –was below expectations.

The disappointing result for 2022 was mainly driven by the poor performance of growth stocks, especially those in the technology sector, in which the fund had a significant position.

‘Popular stocks such as Facebook, Apple, Tesla and Netflix had a hard time and losses of 50% or more were no exception,’ the fund managers said, adding that although a number of these shares somewhat recovered during the year, losses remained substantial.

Due to the very poor price performance of these growth stocks, the bonus return on many of the certificates could not be achieved. The strategy change made in 2020 and 2021, investing in certificates on single shares instead of strictly focusing on those linked to the Eurostoxx 50, ultimately did not lead to the desired result, the fund managers stated in the fund’s annual report for 2022.

Bufferfund reached its high point in October 2019, when it had €44.9m assets under management (AuM). Back then it had the ambition to increase its AuM to €100m by 2022, by focusing on wealthy individuals, charities and institutional investors.

However, at the start of 2022, the funds AuM had shrunk to €22.5m and by the end of the year it had seen further outflows of €4.5m, not helped by the highest levels of inflation seen since the seventies and the explosion of the energy prices due to the war in Ukraine.

‘We would like to thank all our (former) participants for the trust they have placed in us and wish them every investment success in the future,’ the fund managers said.

Investors had until the end of March to sell participations free of charge. Participations that remained unsold were settled at the net asset value (NAV) determined after 31 March.

Luxsipa adds CIBC and Banque Transatlantique

Luxembourg as new members

The Luxembourg Structured Investment Products Association (Luxsipa) has announced that Canadian Imperial Bank of Commerce (CIBC) and Banque Transatlantique Luxembourg have joined the association as new members.

CIBC started its structured products business in Canada in 1995. In 2012, the bank’s structured notes business was launched in Europe through its London branch.

However, because of Brexit, CIBC Capital Markets (Europe) was then established in Luxembourg in 2020, offering a subset of capital markets products to European clients.

Banque Transatlantique

Luxembourg, a subsidiary of Crédit Mutuel Alliance Fédérale, was established in 1989. Its structured products business is headed by Renato Strillacci, director of the investment department at the bank.

In May, the association appointed Pierre Stoll as its new secretary general.

Luxsipa was founded in 2019. Its members include Banque de Luxembourg, Banque et Caisse d’Epargne de l’Etat Luxembourg (Spuerkeess), Banque Internationale à Luxembourg (BIL), BGL BNP Paribas, BNP Paribas, Quintet Private Bank (Europe), Intesa Sanpaolo Wealth Management, Société Générale Luxembourg, Société Générale, Société de la Bourse de Luxembourg.