Product Know-how

General information about capital protection without a cap

Within the certificates family, capital-protected products are the most secure form of investment. At the time of issuance, they’re most often equipped with a term of several years and the guarantee that a specified minimum amount will be repaid at maturity (usually 100 percent of the issuance price).

A basic rule of thumb for these products: the lower the safety threshold, the greater the chance for price gains. But an important thing to bear in mind is the fact that the capital guarantee is normally only applicable at maturity. So if you want to sell your capital-protected product prior to the end of its term, the redemption price could actually be below the guaranteed repayment level if the underlying security has not performed favorably.

Capital-protected products are suitable for particularly risk-averse investors who wish to hold the product through to maturity and are not prepared to accept any loss that might exceed the level of the guaranteed repayment. 

Exchangeable certificates

As is the case with all other capital-protected products, repayment in the amount of the capital protection is guaranteed at maturity. You’ll participate without limit in any gains that exceed the strike price (i.e. this product has no cap). If the price of the underlying instrument at maturity lies above the strike price, your certificate will be automatically converted into a commensurate amount of the underlying shares. The conversion premium is set at the time the certificates are offered for subscription and thereby defines the conversion (strike) price.

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