Globe and Mail – Desjardins Group is winding down hedge fund-linked products, as Canada’s largest financial co-operative joins life insurers in dealing with problems in guaranteed investments that have been pounded by the downturn.
Montreal-based Desjardins is shutting down lines of what are known as "principal-protected notes," or PPNs, an extremely popular product with individual investors. The move comes as Manulife Financial and Sun Life Financial take reserves against possible losses on annuities and other funds that promise customers’ capital will always be returned.
The products that Desjardins killed bought hedge funds to offer the co-op’s 5.8 million customers the upside of markets, along with a guarantee they would get back 100 cents on the dollar. Desjardins is closing PPNs called the Perspectives Plus Guaranteed Investment and Alternative Guaranteed Investment, both of which come due over the next five years.