Structured notes provide the possibility of higher returns while also balancing risk
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A structured note allows you to take exposure to an underlying asset or market of your choice, in accordance with your investment objectives and risk tolerance.
Some structured notes fully repay your initial investment at the end of their term while with others you put your capital at risk in return for potentially higher returns.
Higher returnsPotentially higher returns than structured deposits or cash in a savings account.
Risk levels to match your investment goalsAs a market leader in structured products, our expertise is in designing the right structured note for your risk profile.
Fixed investment horizonMost structured products have a fixed term – typically three to six years – so you know when their investment will mature. Some feature early ‘kick-out’ options, which offer investors an opportunity for an early maturity dependent on the performance of the underlying asset on set points.
Portfolio diversificationStructured products can also help diversify your portfolio by investing in assets that are otherwise difficult to access.
Product innovation and competitive termsWe aim to offer you innovative product designs and competitive terms. Our product specialists work with leading investment banks including the Investment Banking division of Barclays, an award-winning designer of structured products.
Requires a minimum investment of £100,000 (or local currency equivalent).
Example: Regular Distribution Note
The Regular Distribution Note is a five year investment paying a fixed return of 6% each year. However repayment of capital at maturity of the investment depends on the performance of the FTSE 100 Index over the five year term.
If at any point during the investment term the closing level of the index has fallen below 50% of its initial index level (set on the investment start date) and the closing level of the index at maturity is lower than its initial index level, then your capital repayment will be reduced by the percentage difference between the initial index level and final index level of the index.
If the closing level of the index has not dropped below 50% of the initial index level at any point during the term of the investment, then your capital will be repaid in full at the end of the term, regardless of whether the final index level of the index is lower than the initial index level.
If the final index level is higher than the initial index level, regardless of whether it dropped below 50% of its initial index level during the term, then your capital will be repaid in full.
Lets assume you invest £100,000 in a 5-Year Regular Distribution Note paying a fixed return of 6% per year. Over the term of the investment you will receive a total return of £30,000, irrespective of the performance of the index during the term.
Possible capital repayment scenarios for a Regular Distribution Note
- The FTSE 100 falls to less than 50% of the initial value during the product term but at the end of the term is higher than the initial value. Your full £100,000 capital is repaid and all the return payments are made.
- The FTSE 100 falls below the initial value during the product term but not below 50% of the initial value and at the end of the term is lower than the initial value. Your full £100,000 capital is repaid and all the return payments are made.
- The FTSE 100 falls by more than 50% of the initial value during the product term and at the end of the term it is lower than the initial value then your original investment will be reduced by the extent to which the index is below its initial level. You would therefore be repaid less than your capital invested but all return payments will be made.
The above is only an example of possible scenarios for a Regular Distribution Note. We do not offer these terms at present. Full details of the terms available at the time that you enquire and the associated risks of investment will be included in the product brochure and prospectus. To find out more about this type of product and other products we offer, please arrange to speak to one of our International Investment Advisers.
- Potentially higher returns than structured deposits or cash in a savings account
- Potential return is defined at the outset
- A range of risk levels to suit your needs
- Offers an element of capital protection
- Exposure to assets that may otherwise difficult to access
- Possible to sell prior to the end of the investment term
WHAT ARE THE RISKS?
- If you need to sell the note before its term ends, you may get back less than you invested. You should only invest in structured notes with money that you won’t need during the term of the note.
- If the issuer of your structured product is unable to meet its financial obligations then you may not receive back your original investment or the expected return. The issuer’s failure to pay will not of itself give rise to any claim for compensation from a state scheme such as the Financial Services Compensation Scheme in the UK.
- If the specified conditions for the return are not met, then you could get no return on your initial investment – or a lower return than a savings account would have paid.
- Different products have different levels of risk
- In some instances, if the value of the investment link drops, you may get back less than you originally invested at the end of the term.
- You could lose all of your initial capital when investing in certain structured notes even if it is held until the end of its term.