Banks in the US invested 2.08 billion dollars into Structured Notes in December according to Bloomberg. As I’ve always said as long as you understand the risks structured notes are a great investment particularly in a sideways market. 

As we go into 2013 we at deVere Group have the following opportunities available.

Goldman Sachs (6 month) – US/ Europe/ HK Autocallable Note 

A coupon of 12.0% ( US$ and GBP) and early maturity after 6 months if indexes are equal to or above starting level .   If indexes are not equal to or above starting levels after 6 months, product rolls to end of years 1,2,3, 4 and 5 with the potential of 15.25% p.a (US$), 12.0% p.a (GBP) and early maturity at each anniversary

Investments linked to S&P 500, Hang Seng and EuroStoxx 50 Indexes

40% protection barrier

5 Year maturity with full return of capital less initial charge if protection barrier not breached on maturity date.

4% initial Charge

Morgan Stanley – Quarterly Income Note

Quarterly cash coupons provided all indexes are equal to or above 60% or 70% ( subject to choice of Note) of their starting levels at the end of each quarter:

5 Year – 1.70% (US$), 1.60% (GBP) and 1.45% (Euro) – 40% Protection

5 year – 2.10% (US$), 1.95% (GBP) and 1.70% (Euro) – 30% Protection

Where one or more index is below its income barrier level at the end of a relevant quarterly period the income payment for that quarter will be missed. Quarterly income payments will then resume provided all indexes return to above their respective income barrier levels.

Full return of capital less initial charge at maturity providing all indexes close at or above 60% or 70% ( subject to choice of Note) of their starting levels

Investment linked to the FTSE 100, S&P 500 and Eurostoxx 50 Indexes.

5 Year (40% Protection)

5 Year (30% Protection)

4% Initial charge

If you think the markets are going to be flat, either note could be chosen, if you think the markets will increase but not by 15% then an autocallable note would be best. If you think the markets will fall but not more than 40% then an income note is a good solution. Whichever note you choose, financial advice should always be taken before making the final decision.

Nigel Green deVere Group

blog written 4th of January