STRUCTURED PRODUCTS IFA offers our Family Office clients individually negotiated Structured Products Structured products come in various forms. They are generally defined as an investment backed by a significant counterparty where the returns are defined by reference to a defined underlying measurement, such as the FTSE 100 and delivered at a defined date or dates.
They can be on deposits, bonds or a total capital protected, based upon an index. Needless to say these type of investments do not give very high returns because of the degree of security. The other types are based upon a European barrier of 50% capital stop loss and therefore called “capital at risk” – potentially. We have chosen index trackers based on the potential capital at risk type products. The returns are considerably better. In an effort to overcome the problems of mutual funds not performing to their bench mark, we have negotiated, with suitable investment houses, index tracking loan notes. These notes are issued by the investment house concerned and the institution is capital guaranteed, for example with the Zurich Stock Exchange. Naturally full diligence is undertaken. In addition the capital repayment is covered by a Counterparty. These are usually credit A, AA or AAA rated banks. Barclays Bank, BNP Paribas, Citigroup, Rabobank and Investec Bank have all been active in this market. The notes are issued for a 5 or 6 year period and can mature at each anniversary, or until the maturity date. At the outset we decide the indices that are most suitable and likely to increase, all in conjunction with the client. The investment is formed into a bundle of two or three indices, spread globally. We negotiate the annual return and the coupon rate has been between 9.5% and 11%. At each anniversary of the note the index advances are measured. If all the indices in the bundle have exceeded the original strike figure then the capital is repaid 100% together, with the coupon rate. This is called the Auto call / Kick out .There is no exit cost. If the indices have not exceeded the original strike amount, or one does not, the note is rolled over to the next anniversary. We have not seen a note go to full maturity, which indicates the success that we have had with them. Should the indices not exceed the original strike amount at maturity the bundle is measured. At this point the European barrier kicks in, which means the overall value would have to reduce by more than 50% for any real loss to occur. This is most improbable and historically not seen by us. The full 100% capital is consequently repaid together with the accumulated coupon where the value does not drop below 50% of the original value. That is to say that the capital is not guaranteed but is as close as one can get with between 9.5% and 11% per annum return.
For further information contact : IFA International Family Advisory Ltd. - Tel : +356 99725151 Email: email@example.com