Thursday, 16 June 2022 Reading time : 2 minutes

Commodity shortages, inflation, rising interest rates - a cocktail that includes a high degree of uncertainty. In this environment, capital protection certificates offer an attractive alternative to a direct investment in the stock market.

How it works
With capital protection products, investors hedge against falling prices. The capital protection amounts to 100 percent of the nominal value of the product and applies at maturity. As with bonds, price fluctuations may occur during the term. The upside potential of capital protection products is generally lower than for other products and may be limited. However, the investor has the opportunity to earn a significant return without sacrificing capital protection. Capital protection products with participation grant, in addition to the guaranteed redemption, a participation in the price increase of the underlying.

- Repayment at maturity is at least equal to the amount of capital protection.

- Capital protection is expressed as a percentage of the nominal value

- Capital protection refers only to the nominal and not to the purchase price

- Value of the product may fall below the capital protection during the term of the product

- Participation in the price increase of the underlying from the strike price

Participation and Underlying
The participation rate defines the extent to which the investor benefits from the price gains of the underlying with the weakest performance at expiration. In the case of this product, the participation rate is 80%. The underlying is the share with the weakest performance at expiration from the respective basket.

Possible redemption scenarios
Scenario 1: +60.45% The weakest share in the basket is quoted 74% above the initial level at expiration. The redemption is 159.20%, as the participation rate is 80%. In addition, there are the guaranteed coupons of 0.25% per year.

Scenario 2: +26.85% The weakest share in the basket is quoted at expiration 32% above the initial level. The redemption is 125.60% as the participation rate is 80%. In addition, there is a guaranteed coupon of 0.25% per year.

Scenario 3: +1.25% The weakest share in the basket is quoted at maturity 15% below the initial level. The redemption is 100% as the capital protection is 100%. In addition, there is a guaranteed coupon of 0.25% per year.

Scenario 4: +1.25% The weakest share in the basket is quoted at expiration 28% below the initial level. The redemption is 100% as the capital protection is 100%. In addition, there is a guaranteed coupon of 0.25% per annum.

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