Any views about this bond, details on their website. Can't post link due to the site rules - I'll have to up my posting rate.
It's a 3 year 11 month product investing in a basket of approx. 50 well-known US stocks, all dividend payers and growers historically.
There are two options - (a) 100% guaranteed and 50% participation, and (b) 90% guaranteed and 140% participation. The dividends accrue to the product and are reinvested. They're using a volatility-controlled version of the index (a little odd for a product that is itself guaranteed), and the product is structured as a deposit with KBC. I assume this means it is covered by the Deposit Guarantee Scheme up to €100,000 - I've asked them to confirm this but haven't heard back yet. No caps on either individual or overall performance. Subject to DIRT on exit.
I am particularly interested in this because I own a few of these stocks myself directly, and am in reasonable profit on them. I've been thinking for a while of selling them, due to concerns about the level of the market generally, but have held off because I can't find anywhere more attractive to put the money. Liquidating my direct holdings and investing in the 90% version gives me continued (in fact, 40% geared) exposure to the same investment premise, and puts a 10% limit on my downside if it doesn't perform.
The only downsides I can see are (1) the non-flexible holding period - I'm committed till mid-2017 no matter what, (2) the volatility control will dampen returns in a rising market, and (3) there's averaging at the end which will have the same effect. But overall I think it looks like a neat solution to the investment dilemma I've been pondering. There's an intermediary commission which I'm hoping they'll rebate - again haven't heard back on this.
Any other thoughts? Am I missing anything?
Thanks in advance.
It's a 3 year 11 month product investing in a basket of approx. 50 well-known US stocks, all dividend payers and growers historically.
There are two options - (a) 100% guaranteed and 50% participation, and (b) 90% guaranteed and 140% participation. The dividends accrue to the product and are reinvested. They're using a volatility-controlled version of the index (a little odd for a product that is itself guaranteed), and the product is structured as a deposit with KBC. I assume this means it is covered by the Deposit Guarantee Scheme up to €100,000 - I've asked them to confirm this but haven't heard back yet. No caps on either individual or overall performance. Subject to DIRT on exit.
I am particularly interested in this because I own a few of these stocks myself directly, and am in reasonable profit on them. I've been thinking for a while of selling them, due to concerns about the level of the market generally, but have held off because I can't find anywhere more attractive to put the money. Liquidating my direct holdings and investing in the 90% version gives me continued (in fact, 40% geared) exposure to the same investment premise, and puts a 10% limit on my downside if it doesn't perform.
The only downsides I can see are (1) the non-flexible holding period - I'm committed till mid-2017 no matter what, (2) the volatility control will dampen returns in a rising market, and (3) there's averaging at the end which will have the same effect. But overall I think it looks like a neat solution to the investment dilemma I've been pondering. There's an intermediary commission which I'm hoping they'll rebate - again haven't heard back on this.
Any other thoughts? Am I missing anything?
Thanks in advance.