Structured Products — Investment Strategies For Volatile Markets

Structured Products — Investment Strategies For Volatile Markets

These ‘interesting times ’ have seen all Financial Institutions reassess their investment strategies and with that bring to market a myriad of different investment products that we assess and utilise for clients where appropriate.

The market has been sold down aggressively, rebounded, sold down…and so on, in recent months and is currently priced at very attractive levels. While there will no doubt be more volatility as the issues causing market weakness continue to be resolved, by taking a three year time frame we believe you will capture the markets inevitable upswing. As mentioned in the most recent Charlie Aitken article, it is very difficult to be bullish at the bottom when fear abounds.

With this in mind there are ways to gain market exposure via a protected position with a defined, limited downside and take a longer-term investment view. It is important to remember that historically the share market has led the broader economy in its recovery by an average period of six months, so investors waiting for positive macro data to make them feel more comfortable will miss the initial market upswing which could well be substantial. For these reasons we believe the following structured investment is a compelling opportunity.

This Product could be suited for those:

• still nervous from market volatility and wanting to place a larger allocation of their portfolio to defensive assets such as bonds and cash, yet wanting to get the exposure and potential upside of the Australian share market over the next 3 years, or
• those who have excess cash sitting idle and want to invest in the market but also want downside protection, or
• for investors starting out with limited cash wishing to commence a $100,000 portfolio.

Brief Product Specifications:

• An investment amount of $9,250 gives you an uncapped exposure of $100,000 to the S&P/ASX 200 index for a twelve-month period, with the ability to roll the investment in to a 2 nd & 3 rd year.
• If the index falls or stays at currents levels your loss is limited to $9,250 (the interest paid) – irrespective of how far the index falls.
• The $9,250 is fully tax deductible.
• The ability to walk away at any time without incurring any further costs, penalties or anything further to pay on the loan at any stage (or annually).
• The potential for annual coupons (dividends or interest) to help fund your interest.

The following links provide case studies and futher details.