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Old 18.04.2011, 14:49
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Re: Financial Mis-selling to expats

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That's great. Will you see this when it matures?

Autocall notes seem quite complex: http://www.structuredproductreview.c...26-02-2010.pdf

Can anyone understand this?
1. I think he has seen it. It's kicked out at 13% in one year. If it hadn't it would have rolled over each year until it paid out at the end or kicked out at 13% x the number of years. So yeah, I think he's got the capital and the 13% to go spend now.
2. Yeah. Most structured products are not fully capital protected. They're often based on an "underlying". This could be 4 different blue chip stocks. It could 8 different indices of developing countries. It could be the price of Gold, the price of Silver, the inverse of CHF/EUR plus the FTSE 300.

The is then a condition set eg: if any of the "underlyings" fall below 57% of their starting value (at the beginning of the structured product) then your initial capital is at risk. If they fall, but not below the 57% then you get back 3% per year but not 13% per year.

So, it's important to remember that structured products are not bank accounts. There is a good amount of risk there. You get nothing for nothing in this world, but similarly this doesn't mean that 13% return is either weird or unusual. Many funds have averaged more than this over the past 15 years including all the drops/bear markets. So why a structured product? Well, it helps you get exactly what you want. If you want to take the precise amount of risk that a 13% coupon brings, that product might be for you. If you like Gold, hate silver, are indifferent to India, think China will crash in the short term but recover after 5 years....there's either a structured product for you (to reflect your views) or you can get one structured for you if you have enough money, or club together with like minded friends and have a bank structure you a product like this. You need around 1 million USD for it to be worthwhile for an investment bank to structure a product.
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