Australian investors have so far resisted the lure of capital guaranteed products, so popular elsewhere in Asia-Pacific, and particularly in Hong Kong, where capital protected funds accounted for 90% of net fund sales last year. SG Australia, a division of French bank Société Générale, is so far the only bank to issue guaranteed funds in the form of its Capital Protected Equity-Linked Securities (Capels).
However, Westpac has already launched deposits linked to the performance of an underlying asset with a 100% capital guarantee. The participation and range deposits – the performance of the former is linked to an underlying asset, the latter gives an greater yield if the underlying asset remains within a defined range - were launched three months ago and have seen significant interest from Westpac’s customer base, says Eakin. The bank is also looking at widening the availability of these products to a broader customer base. “We've been offering the participation and range deposits for around three months, and we've been distributing them mostly to existing customers. But we are reviewing that at the moment to actually roll them out through external distribution and a wider customer base," said Eakin.