Cube markets FTSE100 structured fundAugust 07, 2014 - 18:16
Cube Investing is promoting an open-ended collective investment fund linked to the performance of the FTSE100 index. The CitiFirst Investments UK Autocall Fund Class A2, which is listed on the Irish Stock Exchange, has the potential for early redemption, offering 7% pa if on any observation date the level of the index level is at or above its initial level. If an autocall does occur, the return will automatically be reinvested in a new, similar autocall strategy.
David Stuff, chief executive of Cube, spoke to SRP about the main benefits of this rolling autocall strategy. “The product has already struck, but it trades every day. Investors can buy and sell whenever they want,” he said. “So at the moment, the fund is offered at a small premium to par, but the triggers are now in the money. If investors buy now the first trigger date is in December 2015.”If the fund fails to kick out early, it offers a maximum 42% return, provided that the closing level of the FTSE has not fallen below 60% of its opening level. Should the index fall below this barrier, capital return will be decreased one-to-one with its performance.The proximity of the autocall date and the potential return of 14% in the first year make this fund “a particularly interesting proposition now”, according to Stuff.
Aside from the daily liquidity of the fund, another potential attraction for investors is the flexibility of its wrapper, since the fund qualifies as an offshore bond, Isa and Sipp, and can be bought via a variety of platforms, according to Stuff. “Our model is to offer products that advisers can buy through wraps and platforms, and so this fund is a perfect fit,” he said. “The fund has daily liquidity, a potential for strong returns, and a simple shape that we think will appeal to many investors.” JPMorgan is acting as the fund custodian.
This article appeared on 7.08.14 on StructuredRetailProducts.com
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.