By Scott Ronalds

From: jsmith@mega-bank.com
To: NewProductCommittee@mega-bank.com
Date: Mon 11/16/2009 1:08 AM
Subject: This Year’s Meal Ticket

Just woke up with a brilliant idea!! I’m putting it in an email while the juices are flowing. Still working on the name, but I’m thinking something along the lines of the H1N1 Fundamental Vaccine Equity Plus Fund. We could even throw the word ‘yield’ in there somewhere to capitalize on the current demand for income products.

Hear me out. H1N1 is all over the news. An investment product attached to the vaccine would be hot. Real hot. It would simply hold shares of the major vaccine makers – GlaxoSmithKline, Sanofi, Novartis, and AstraZeneca. We could either hold the stocks in equal proportion, or throw a quant overlay over the portfolio to make it sound more sophisticated and intriguing!

If we go with an open-end fund, I figure we could charge a fee of at least 2.5% (in line with other specialty funds). Or, we could add a few features to really get this thing off the ground. I’m talking principal protection. We could call our friends at the derivatives desk and slap a guarantee on this baby. We’ll make the minimum holding period 10 years to make sure the odds of the guarantee kicking in are next to nothing. We should be able to get an extra 0.5% in fees out of this each year.

We’ll offer it in multiple series so that no advisor will be left behind. A healthy trailer fee on the A-Series will get this thing moving.

If the idea doesn’t fly with the mutual fund brass (although I can’t see how it wouldn’t), we’ll take it to the investment bankers. Make it a closed-end fund. They’ll be all over it as long as they can take their usual 7% off the top. And they shouldn’t have any problems raising millions on the Street, given how hot this thing is sure to be!!

Or, if we want to give the bank’s ETF division something to build on, what better product than this?! With only four stocks, the trading costs will be next to nothing, but I figure we could still charge a fee of around 0.7 – 0.8%. Or better yet, we could leverage it up. Leverage, baby!!! Give investors 2X the daily return of the portfolio. Average Joe still can’t figure out how these things work, but the word ‘leverage’ alone would be sure to pique some interest.

Bottom line, we can’t lose on this idea. If we get it to market right away, we can capitalize BIG TIME on this flu thing. What happens when the craze cools down, you may ask? We’ll just merge it with one of our health care funds. Brilliant!!

Let’s set up a meeting first thing in the AM.

Cha-ching!
JS