Structured products, as well as bank deposits, have their service life, therefore this type of investments can be safely attributed to the category of "Diwali investment." Gains on such products shall be paid at the end of the investment. If the client decides on early termination of the investment contract, it may lose not only income, but also a part of the deposit. In the normal course of events, structured products can make a profit of more than 40% per annum.
How is the calculation of yield structured product
When investing in structured products, it is important to take into account two main components: the degree of protection of capital and the rate of participation in the profits (KU). These two parameters are interrelated, that is with the growth of participation rate and rising risks. The participation rate determines how many percent of the profit will receive the client at the end of the investment period. With the growth of the underlying assets the client receives income, otherwise it returns its initial capital.
With the full protection of the risk of deposit participation rate is generally low. Of course, there are strategies with higher CG, but at the heart of a large income are, as we know, increased risks.
Let's look at the process of making a profit by the example. Suppose that a customer purchases a product with structural options contracts on investment period of 1 year. The participation rate is set at 40%, the customer is given a 100-percent guarantee return of funds at the end of the investment period. A year passed. Option rose in price by 60%. According to the agreement, the customer receives your initial deposit and 24% of profits. Why only 24%? To answer this question we present a formula that calculates the profit of the client: 40% of the yield of the 60% profit on the option => we get those same 24%. Terms of the contract should be possible to examine closely in order to avoid unpleasant situations with hidden commissions merchants joint venture or the corridors of return.
Another example. The contract established a corridor of return within 60-100%. If the option price will increase by 59%, the client does not receive a profit. Income growth is obtained only when the underlying asset is within the specified range.
CS may be set at 150%. Income in this situation will be substantially more, but the risks are also extremely high. Today the market is represented by a different kind of structured products: the customer is proposed to create two portfolios and keep them for, for example, three years - at the end of this period, the customer profits from the portfolio, which proved to be the most profitable.
Classification of structured products on the level of risk
On the criterion of the possible risk of structured products are divided into:
SP with 100 percent capital protection.
A joint venture with partial capital protection.
A joint venture with a conditional protection or its complete absence.
SP gives the possibility of higher returns compared to bank deposits. However, the risks in the joint venture is also higher. You have to understand that the risk is the result of a large number of external factors that are different for each type of structured products. Here are the main risk factors of investing in a joint venture:
Announcement of the issuer's default risk-free investment portfolio. In this case, you can lose all the money
High market volatility
Expiration of structured product - with the growth of the underlying asset is not possible to record profits
Lost profit. If the underlying asset falls in value at the end of the term of the joint venture investor receives only the initial funds that makes investments unprofitable
Reduced liquidity of assets.
If we talk about non-commercial risks, they must in any case be minimal. It is possible, including in the design of structured products as part of the agreement on the brokerage and banking services.
How is the calculation of yield structured product
When investing in structured products, it is important to take into account two main components: the degree of protection of capital and the rate of participation in the profits (KU). These two parameters are interrelated, that is with the growth of participation rate and rising risks. The participation rate determines how many percent of the profit will receive the client at the end of the investment period. With the growth of the underlying assets the client receives income, otherwise it returns its initial capital.
With the full protection of the risk of deposit participation rate is generally low. Of course, there are strategies with higher CG, but at the heart of a large income are, as we know, increased risks.
Let's look at the process of making a profit by the example. Suppose that a customer purchases a product with structural options contracts on investment period of 1 year. The participation rate is set at 40%, the customer is given a 100-percent guarantee return of funds at the end of the investment period. A year passed. Option rose in price by 60%. According to the agreement, the customer receives your initial deposit and 24% of profits. Why only 24%? To answer this question we present a formula that calculates the profit of the client: 40% of the yield of the 60% profit on the option => we get those same 24%. Terms of the contract should be possible to examine closely in order to avoid unpleasant situations with hidden commissions merchants joint venture or the corridors of return.
Another example. The contract established a corridor of return within 60-100%. If the option price will increase by 59%, the client does not receive a profit. Income growth is obtained only when the underlying asset is within the specified range.
CS may be set at 150%. Income in this situation will be substantially more, but the risks are also extremely high. Today the market is represented by a different kind of structured products: the customer is proposed to create two portfolios and keep them for, for example, three years - at the end of this period, the customer profits from the portfolio, which proved to be the most profitable.
Classification of structured products on the level of risk
On the criterion of the possible risk of structured products are divided into:
SP with 100 percent capital protection.
A joint venture with partial capital protection.
A joint venture with a conditional protection or its complete absence.
SP gives the possibility of higher returns compared to bank deposits. However, the risks in the joint venture is also higher. You have to understand that the risk is the result of a large number of external factors that are different for each type of structured products. Here are the main risk factors of investing in a joint venture:
Announcement of the issuer's default risk-free investment portfolio. In this case, you can lose all the money
High market volatility
Expiration of structured product - with the growth of the underlying asset is not possible to record profits
Lost profit. If the underlying asset falls in value at the end of the term of the joint venture investor receives only the initial funds that makes investments unprofitable
Reduced liquidity of assets.
If we talk about non-commercial risks, they must in any case be minimal. It is possible, including in the design of structured products as part of the agreement on the brokerage and banking services.
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