Morgan Stanley has launched an array of indexes that seek to generate returns from potential or realised private equity buyouts.The Morgan Stanley Target Equity Index Family comprises indexes of companies that are undervalued according to measures private equity firms typically use, such as price-earnings ratios. This is meant to allow investors who may not be able to access private equity to benefit from the rise in stocks typically associated with buyouts.
“This is a very cheap way to invest in private equity,” said Jo Tyler of Morgan Stanley’s London-based retail structured products group. She added that even if firms were not bought out, rumours that led to an increase in equity prices would still benefit investors in the indexes.
There are six regional indexes, covering US, European, UK, Japanese, emerging market and international equities. They will be calculated daily by Standard & Poor’s and rebalanced on a quarterly basis. Although the bank has not yet conducted any trades on the indexes, Tyler said it would offer tracker certificates to retail investors, along with an assortment of bespoke over-the-counter products.
The index family is based on a research report published by the bank in April 2003, which investigated investment opportunities created by private equity activity. It is part of a broader drive by Morgan Stanley to capitalise more on its in-house research.
More on Structured Products
Regulator set to focus on backtesting and replicability of index products
The watchdog’s priorities for 2015 include drawing up new powers of product intervention
Contineo initiative set to transform structured product sector
Trade body says issuers will face unnecessary legal and compliance bills under Esma plans
Sign up for Risk.net email alerts
Sponsored video: Tradeweb
Multifonds talks to Custody Risk on being nominated for the Post-Trade Technology Vendor of the Year at the Custody Risk Awards 2014
Sponsored webinar: IBM Risk Analytics
Nominated for two technology awards
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.