What is an Protected Note
11.11.2011
What is a Preotected Note?
A Protected Note or Autocall product is essentially a market-linked investment, which can automatically mature (‘autocalled’) prior to the scheduled maturity date if certain predefined market conditions are achieved. The criterion for deciding whether the product is autocalled is whether the underlying reference index is above a predefined level (the ’autocall barrier’). This autocall test is usually carried out on a set of predefined observation dates (for example, annually, quarterly, etc.) specific to that particular investment product, so that the product can only mature on one of these ‘autocall observation dates'.
The underlying reference index will typically be an equity index, but it can also be linked to stocks, a basket of stocks, funds, etc. If a product is autocalled, the investor normally receives a predefined return along with the capital redemption on that autocall date. Most autocall products incorporate a protection feature so that, if the predefined level (the ‘autocall barrier’) has not occurred before the scheduled maturity date, capital is fully protected provided the underlying has not fallen below a certain level (‘the ‘protection level’) during the term of the investment. Only if the underlying has fallen below that protection level, and the product has not been autocalled prior to maturity, will investors be exposed fully to the downside of the underlying market at maturity. Investors can therefore lose some or all of their capital
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The UK Autocall Fund GBP Class A
The UK Autocall Fund provides for attractive returns in rising or flat UK equities markets as measured by the performance of the FTSE™ 100 Index (“FTSE”) from its relevant Start Level. The FTSE is the most widely used reference for the UK stock market, which includes the 100 largest companies in the UK. The Fund will pay these returns if the FTSE is at or above predefined levels on specified dates. This process will repeat itself throughout the life of the Fund. The Fund also benefits from Conditional Capital Protection – investment in the Fund is capital protected if the FTSE does not fall below a predefined level. The UK Autocall Fund is designed for investors seeking attractive returns with some level of capital protection, all with the convenience of daily liquidity.
Better Return Opportunities with Low Credit Risk
Investors are experiencing a low interest rate environment with low deposit rates. The UK Autocall Fund has been designed to offer investors the potential for attractive predefined returns on their investment over five year investment cycles or shorter if autocalled. For the first investment cycle, if investors expect that the FTSE will be above 5762.06, starting at the first autocall date in April 2012, the Citi UK Autocall Fund could offer an attractive return of 9.25% per annum per share unit (based on GBP 100 initial issue price). If the FTSE has fallen below 2,881.03 at any time during the first five year investment cycle, the value of the Fund will be reduced by an amount equal to any decrease in the FTSE. In addition, the Fund’s assets are collateralized to reduce credit risk. The Fund combines the features of the popular autocall strategy with the advantages of an open-ended UCITS III fund, the EU standard for regulation and disclosure. The Fund invests in assets that will provide exposure to autocall strategies. Any predefined returns that the Fund receives will be reinvested in assets that provide additional exposure to autocall strategies.
For More info on our latest autocall notes, please go to:
http://synergi-investment.com/latest_offers.html
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