Capital repayment depends on the performance of the underlying; the future performance of which cannot be guaranteed.
Liquidity risk
The investments will not be traded on an organised exchange. The issuer will use reasonable efforts to quote prices in all market conditions.
The secondary market price of the investments will depend on many factors including, but not limited to, the value and volatility of the underlying index, interest rates, dividend rates, time remaining to maturity and the creditworthiness of the Issuer. Prior to maturity, the price may be less than the amount the holder would have received on maturity of the investment.
Exit risk
The tax treatment of structured products can be complex and tax rates and regulations may change during the term of this investment. Guidance is given here, but if in any doubt Investors should seek their own professional tax advice.
Tax risk
Whilst an investor might be happy with the capital erosion prospects at maturity, the reference index/indices may fall throughout the life of the security and the security might fall by more than you would expect.
Time horizon
Boosters
Explaining a booster to an investor
What is a booster?
A booster is a type of Structured Investment which offers increased participation in the underlying index between two pre-defined index levels. These investments are not new, but the difference with Boosters is that the lower level is below today’s current stock market level. This means that it’s possible to make a positive return if the index is flat or down at maturity. In order to afford this, the participation is capped- usually at a 25% rise in the index.
How does it work?
Below is an example of a payoff:
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Potential return: 180% participation from 80% to 120% of the index from its initial level, therefore the maximum return is capped at 72%
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At maturity, conditional capital protection barrier is at 65% of initial level
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The term of investment is 6 years
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The investment cost the investor 100p on day 1
Potential returns at maturity
Commonly asked questions
What's my counterparty risk?
The holder of the security will be exposed to the credit risk of the issuer and this security is ranked as Senior Unsecured debt of the issuer.
What's the process for buying at launch?
Typically, orders should be submitted around 3pm on the launch date, ahead of the UK market close. Trade details are confirmed to the buyer’s contact (dealer), who is asked to confirm his intention to the issuer. The trade is then executed with confirmation from issuer to dealer. Atlantic House manages this process. Typically, settlement in the Primary Market is T+10.
Can I buy more stock after launch?
The period between execution and settlement is known as the “grey market” during which there is usually no constraint on upsizing notional. Usually, a day or two before settlement the bank will fix the final issue size, which will include some inventory for sale in the Secondary Market. It may also be possible to issue further tranches of shares, subject to demand.
Can I sell my investment before maturity?
These securities are not to be traded on an organised exchange. The issuer will use reasonable efforts to quote a price in all market conditions; this has proven to be the case historically. The Bid Price at any time is not determined by the requirement to find a buyer but, rather by a range of market inputs that determine the value of the security’s components. These might include, but are not limited to, interest rates, credit spreads, index performance, dividends and volatility.
No, Atlantic House simply acts in the capacity of introducing broker. Your only financial exposure is to the security issuer.
Do I have exposure to Atlantic House?
What are the most common mistakes made by investors in these securities?
The securities are dynamic, in that they may change throughout their life. It is imperative therefore, that investors understand their Mark-to-Market exposure, to ensure ongoing suitability within portfolios. Atlantic House provides full support in this area.
Where does it fit in my portfolio?
These securities have a variety of portfolio applications. Generally speaking, they should be allocated to wherever the risk lies. For example, an equity index linked security with risk determined by the FTSE 100, should be allocated to UK Equity. It is imperative that investors understand the likely behaviour of this security in a range of market conditions, to ensure continued suitability. Atlantic House provides full support in this area.
Important risk information
Credit risk
The holder of the investments will be exposed to the credit risk of the issuer.
Market risk
Tom May
CEO & CIO
23 years of experience
15 years in group
Jim May
Fund Manager
14 years of experience
6 years in group
Russ Bubley
Fund Manager
25 years of experience
7 years in group
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Source: Atlantic House
Distributions
Investors who receive distributions from the Fund should be aware that these payments are made from capital, this will limit the potential for capital growth.