Introduction To The UK Autocall Fund Class A2 (GBP)July 02, 2014 - 16:57
The UK Autocall Fund is a UCITS IV fund that offers an autocall return. The fund is an open-ended collective investment scheme, with daily trading, and has no maturity date. It is collateralised with government bonds, which are held by the fund custodian JP Morgan.
The UK Autocall Fund (Class A2) invests in a rolling autocall strategy linked to the FTSE100. The strategy potentially delivers 7% per annum (simple rate based on a launch price of 100) over 6 years if on any autocall date (beginning in December 2015) the FTSE100 is at or above its initial level and the index has not fallen below a 60% barrier level at the end of the 6 years. If an autocall does occur on one of the annual Autocall dates or at the end of the 6 year investment cycle then the fund reinvests the return in a new, similar Autocall strategy. Capital is at risk in negative market scenarios if the index falls by 40% or more after six years (December 2019). If a loss to capital does occur then the fund will re-invest a reduced investment amount for the next cycle.
The fund has a daily price so investors can track the value of their investment. The automatic re-investment within the fund means that an investor can remain invested, and can choose to sell their investment or part of it when it suits their needs. Using the fund rather than a plan allows the investor greater control over when and how they sell their investment, and so are able to manage their tax affairs more easily.
Currently with an offer price at 104.2 (30.06.14) and an expected return of 114 in December 2015 if an autocall event occurs, then the product could deliver around 6.47% on an annualised basis to that point. Otherwise if an autocall event does not occur then the investment cycle continues, potentially to December 2019, as described in more detail in the product flyer.
An investor’s yield may increase or decrease depending on the price paid for the shares at the time.
Key Dates and Information
||5 December 2013
STRIKE LEVEL (FTSE100):
BARRIER LEVEL (2019):
NEXT AUTOCALL DATE:
||07 December 2015
FINAL AUTOCALL DATE:
||07 December 2019
- NAV of fund if autocall triggers
in December 2015 is 114
Current unit price of fund
GRY if called at the next call date
9.6% (6.47% annualised)
Offshore Bonds, Pensions and Other Tax Wrappers
The fund qualifies for an offshore bond As a collective investment domestic investors may hold this investment in an offshore bond without causing the bond to become a highly personalised investment. The fund can be purchased through all of the offshore bonds available to domestic investors. The fund qualifies for both an ISA and SIPP It is expected that investors accessing the UK Autocall Fund Class A2 (GBP) via a general investment account will benefit from Capital Gains Tax treatment, but as with all things related to tax you should get your own opinion if you are at all uncertain about your tax situation. Investors are also able to purchase the fund through authorized fund supermarkets and wraps. Please contact us to discuss specific supermarkets or wraps that you may wish to use.
David has been involved in equity derivatives, equity structuring and the structured product market for over 25 years. Before setting up CUBE in 2013 David worked at J.P. Morgan, Barclays and RBS. David has worked with and for retail product providers, discretionary managers and institutional investors.