Wealth Preservation Programme, Apendix III
Principal Protected Notes
A principal protected note is a way of investing in a risk-related market (stocks, hedge funds, currencies, metals, etc), at a reduced level of risk. It is a bond, issued by a bank, which pays interest at maturity. But rather than a traditional coupon, the interest comes in the form of participation in the return of a linked asset or market. Should the linked asset depreciate in value during the life of the bond, the bond is redeemed at maturity by the bank, at nominal value – thus protecting the client’s investment.
- A zero coupon bond with a maturity of typically 3-5 years, issued by a bank with at least a Single A rating according to Standard&Poor’s (Credit Suisse, Deutsche Bank, Paribas, UBS, RBS or similar).
- Nominal investment guaranteed by the bank, at maturity.
- Publicly listed on a recognized stock exchange.
- Daily liquidity in secondary market – can be used to lock in profits and roll investment into a new note, creating a higher floor for the original investment.
- Participation in equity link, usually 90-200% of underlying market’s performance.
Current subscriptions for the Wealth Preservation Programme:
- 5-year note, linked to a basket of US stocks, USD denominated, 100% protection of nominal investment, 160% participation in the return of the equity basket.
- 2. 5-year note, linked to S&P BRIC 40, USD denominated, 100% protection of nominal investment, 90% participation in the return of the index
|Market Link||Time to maturity||Subscription price||Participation rate||Guarantee at maturity|
|US stocks||5 years||100||160%||100%|
|BRIC (SBR 40)||5 years||100||90%||100%|
• Pfizer Inc
Nordica Investment Allocation Model