Capital-protected structured products

Capital-protected structured products are investments that guarantee you will get back your initial investment. These products invest primarily in stock markets and in stock market indices, and your investment remains liquid – you can buy or sell on any Swiss market trading day.

Highlights

  • A structured product where the money you invest is protected
  • Often provides a higher return than that on a typical savings account

Details

When the structured product reaches the end of its term, you get back all the money you initially invested. That means your capital is fully protected. In addition, if the value of the asset underlying the structured product (e.g., the stock or stock market index) goes up, you will also receive the corresponding gain. However, you won't lose any money if the underlying asset's value goes down.

Example

Susan Brown wants to invest in the Swiss stock market index, the SMI. But she doesn't want to risk losing the money she has to invest. So she decides to place CHF 1,000 in a capital-protected structured product linked to the SMI.

The amount of money Susan will get back when the structured product matures will depend on both the SMI's performance and the product's participation rate in the SMI's performance. For example, if the participation rate is 100%, each time the SMI goes up by 1% the value of Susan's investment will increase by 1% (or CHF 10, which is 1% of her initial CHF 1,000 investment). Of course, if the SMI goes down, Susan's investment is not affected.

Therefore one of two things could happen when Susan’s investment matures:

  • If the SMI goes down over the term of Susan's investment, Susan will get back her initial investment of CHF 1,000 but nothing more; or
  • If the SMI goes up over the term of her investment, Susan will get back her initial investment plus the corresponding percentage gain in the index (1%, or CHF 10, in the example above).

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