DBS will relaunch a structured product in its private banking arm linked to indices targeting outperformance based on ESG factors after previously raising nearly $70 million.
The Singaporean private bank will relaunch the product after raising S$95 million over seven tranches, according to a statement, delivering an average return on investment of 135 percent over two years.
«This offering represents DBS Private Bank’s confidence in the ESG proposition’s potential to ride out market uncertainties and outperform in the long-term,» said Subhra Chatterjee, team lead for equities product management at DBS Private Bank.
Product Structure
The way the note gains alpha exposure to sustainable investing while excluding broad beta is by taking a long position on the MSCI EM Asia ESG Leaders Index alongside a short position on the MSCI EM Asia Index.
«By designing it as an outperformance trade, it functions as a pure-play on ESG – giving clients exposure to the alpha of ESG investing, whilst being immune to the beta of the broad market,» Chatterjee said.
The new tranche is structured as a three-year outperformance warrant with a 15 percent cap on maturity payoff.
More Sustainability
The bank is extending its efforts beyond just structured products, with the integration of MSCI ESG ratings into its wealth suite since January and support for social entrepreneurship in Asia through the DBS Foundation.
«Covid-19 has accentuated many ESG issues, turning them from invisible to visceral, from barely existent to existential,» said Joseph Poon, DBS Private Bank’s group head.
«The focus on ESG issues is here to stay, from investments delivering both financial as well as ESG returns, to society’s raised expectations and scrutiny of corporate practices and behaviors.»
