Markets currently offer certificates on single stocks, indices, sectors, themes, commodities, interest rates, currencies, actively managed funds and is constantly expanding the underlying range.
The investment performance of these certificates will be the same (minus fees) as the performance of the underlying asset. Performance Tracking Products are intended for medium to longer-term investors.
Advantages
- Availability, Flexibility and Convenience: Easy access to a large variety of investment alternatives. Small denominations, low transaction costs and tranparent fees facilitate investor participation in the world markets.
- Transparency: Certificate prices are transparent, they move in tandem with the underlying asset (before accounting for fees).
- Liquidity: We are committed to maintaining a two-way secondary market throughout the life of a Certificate. Additionally, many Certificates are listed and can be traded on different exchanges.
Assumptions
Comparison between an S&P 500® Index direct investment (assume an investor could buy the S&P 500® Index) and an S&P 500® Index Quanto Certificate.
The investor is based in Europe and has EUR 1,000 to invest.
|
Underlying |
Certificate |
Price behaviour: markets up
Price behaviour: markets down |
Up
Down |
Up
Down
|
| Secondary market |
Yes |
Yes
|
| Easy access |
Not all underlyings are accessible to private clients |
Yes (through stock exchanges)
|
| Simplicity of trade |
Depends on underlying content (e.g. to buy the S&P 500® Index, the client needs to buy 500 individual shares) |
Very simple (e.g. one investment in the S&P 500® Index Certificate can buy all the 500 shares of the S&P 500® Index
|
| Transaction costs |
Can be very high |
Low
|
| Transparency |
May be low and can be difficult to oversee |
High (only one price)
|
Selecting the Right Product
Certificates are suitable for investors who:
- Expect a rise in the price of the underlying asset (i.e. single stock, index, commodity or currency)
- Want to have medium to long-term exposure to a particular market or sector
- Want to participate in the price movement of the market by investing in small denominations
- Want to get an easy access to a large range of underlyings
- Want to take advantage of the flexibility and low transaction costs associated with these products
Risks
The risk related to investing a Certificate is comparable to a direct investment in the underlying. If the underlying decreases, the value of the Certificate decreases. In the worst case, the investor can lose their entire investment.