Cube

Terms & Conditions

Important Notice

This website is maintained by CET Capital Limited which is a limited company registered in England. Its registered offices are at 55 Bryanston Street, London, W1H 7LZ. CET is authorised and regulated by the Financial Conduct Authority no. 446267.

This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.

Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.

This website shall not constitute an underwriting commitment, an offer of financing, an offer to sell, or the solicitation of an offer to buy any securities described herein, which shall be subject to CET internal approvals. No transaction or service related thereto is contemplated without CET subsequent formal agreement.

This website contains indicative summaries of the terms and conditions of the securities/transactions described herein and may be amended, superseded or replaced by subsequent summaries. The final terms and conditions of the transaction and any related security will be set out in full in the applicable transaction confirmation, offering document(s), pricing supplement or binding transaction document(s).

CET does not guarantee the accuracy or completeness of information which is contained in this website and which is stated to have been obtained from or is based upon trade and statistical services or other third party sources. Any data on past performance, modelling, scenario analysis or back-testing contained herein is no indication as to future performance. No representation is made as to the reasonableness of the assumptions made within or the accuracy or completeness of any modelling, scenario analysis or back-testing. All opinions and estimates are given as of the date hereof and are subject to change. The value of any investment may fluctuate as a result of market changes. The information in this website is not intended to predict actual results and no assurances are given with respect thereto.

This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.

Parts of this website are being made available in the UK to persons who are investment professionals as defined in Article 19 of the FSMA 2000 {Financial Promotion Order) 2005. Any investments to which the contents of these parts relates to will be entered into only with such persons. Clients should contract and execute transactions through a broker in their home jurisdiction unless local regulations permit otherwise. The materials contained in these parts of website are not for distribution to retail customers.

CET does not provide, and has not provided, any investment advice or recommendation to you in relation to the transaction and/or any related securities described herein. You may not rely on any communication (written or oral) from CET as investment advice or as a recommendation to enter into any transaction. Accordingly CET is under no obligation to, and shall not, determine the suitability for you of the transaction described herein. You must determine, on your own behalf or through independent professional advice, the merits, terms and conditions and risks of the transaction described herein. You must also satisfy yourself that you are capable of assuming, and assume, the risks of any such transaction. CET accepts no liability whatsoever for any losses arising from the use of this website or its content or reliance on the information contained herein, even if CET knew of the possibility of those losses.

Retail Investors

Structured products are “complex instruments” this means that they will only be appropriate for you if you have sufficient knowledge and experience. In order to access the site you need to be able to agree to all of the following statements

Exclusion of Liability

Certain documents made available on the website have been prepared and issued by persons other than ***. This includes any Prospectus. *** is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, *** shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes any warranty as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.

Risk Warnings

You should always bear in mind that;

  • You already hold other retail investments like funds, investment trusts or structured products
  • You would consider yourself to be a knowledgeable and informed investor
  • You understand the way that the investment return, the maturity value and any income are calculated by reference to the performance of underlying assets
  • You realize that you are not investing in the underlying assets but instead into a products whose performance is linked to these assets
  • You are prepared to invest into products where your capital is at risk
  • You have sufficient financial resources to be able to accept a loss on investments you make
  • You understand that the investment return and any coupon that you receive from structured products will depend on the performance of the underlying assets, and so you may not receive any investment return or income
  • The return of the capital may also be linked to the performance of the underlying assets. You understand how this is calculated, and appreciate that the amount that you receive back when a product matures may be less than you paid for it
  • The defined value of each product will only be realised if the product is held to the maturity date. You understand that if you sell a product before the maturity date you will not get the defined value, and the amount that you receive may be less than the amount that you invested.
  • You understand that if the issuer is unable to meet their obligations to pay the amount due when the product matures, that you will not receive the defined value and will loose some or all of the money you have invested
  • You understand that there are charges built into structured products.
  • You understand the personal tax implications associated with investing in structured products

United States Persons

The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.

Persons accessing this website in the European Economic Area.

Exclusion of Liability

Certain documents made available on the website have been prepared and issued by persons other than CET Capital Limited. This includes any Prospectus. CET Capital Limited is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, CET Capital Limited shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes any warranty as to the accuracy of any information or content on the website. The description of any Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on request and should be read prior to making any investment.

Risk Warnings

Investments of the type described therein may involve a high degree of risk, and the value of such instruments may be highly volatile. Such risks may include, without limitation, risk of adverse or unanticipated market developments, risk of counterparty or issuer default and risk of liquidity. Accordingly you must independently determine, with your own advisors, the appropriateness for you of the securities/transaction before investing or transacting. You should always bear in mind that;

  • The investment performance of any security referred to on this website can be volatile and can go up or down and you can lose your entire investment.
  • Past performance is not an indication of future performance.
  • Rates of exchange may affect the value of investments.
  • Applications to invest in securities referred to on this website must only be made on the basis of the relevant Prospectus.

Cookies

CET Capital Limited may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes. These are statistical data about users' browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking 'I agree' below you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps CET Capital Limited provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.

In the event that you on-sell any investment described herein, you agree to disclose, to the full extent required by any regulations applicable to such sale, any fees or inducements received by you from CET in connection with such investment. CET, its affiliates and the individuals associated therewith may (in various capacities) have positions or deal in transactions or securities (or related derivatives) identical or similar to those described herein.

NO ACTION HAS BEEN TAKEN OR WILL BE TAKEN THAT WOULD PERMIT A PUBLIC OFFERING OF THE SECURITIES DESCRIBED HEREIN IN ANY JURISDICTION IN WHICH ACTION FOR THAT PURPOSE IS REQUIRED. NO OFFERS, SALES, RESALES OR DELIVERY OF THE SECURITIES DESCRIBED HEREIN OR DISTRIBUTION OF ANY OFFERING MATERIAL RELATING TO SUCH SECURITIES MAY BE MADE IN OR FROM ANY JURISDICTION EXCEPT IN CIRCUMSTANCES WHICH WILL RESULT IN COMPLIANCE WITH ANY APPLICABLE LAWS AND REGULATIONS AND WHICH WILL NOT IMPOSE ANY OBLIGATION ON CET OR ANY OF ITS AFFILIATES. THIS WEBSITE DOES NOT DISCLOSE ALL THE RISKS AND OTHER SIGNIFICANT ISSUES RELATED TO AN INVESTMENT IN THE SECURITIES/TRANSACTION. PRIOR TO TRANSACTING, POTENTIAL INVESTORS SHOULD ENSURE THAT THEY FULLY UNDERSTAND THE TERMS OF THE SECURITIES/TRANSACTION AND ANY APPLICABLE RISKS. THIS WEBSITE IS NOT A PROSPECTUS FOR ANY SECURITIES DESCRIBED HEREIN. INVESTORS SHOULD ONLY SUBSCRIBE FOR ANY TRANSFERABLE SECURITIES DESCRIBED HEREIN ON THE BASIS OF INFORMATION IN THE RELEVANT PROSPECTUS (WHICH HAS BEEN OR WILL BE PUBLISHED AND MAY BE OBTAINED FROM CET), AND NOT ON THE BASIS OF ANY INFORMATION PROVIDED HEREIN.

CET Investing is a trading division of CET Capital Ltd, Registered in England No. 04986900. CET Capital Ltd is regulated by the Financial Conduct Authority No. 446267. This website is confidential, and no part of it may be reproduced, distributed or transmitted without the prior written permission of CET.

(1) I HAVE READ UNDERSTOOD AND ACCEPT THIS DISCLAIMER AND

(2) I CONFIRM THAT I AM NOT A RESIDENT OF THE UNITED STATES AND UNDERSTAND (A) THAT THE INFORMATION THAT FOLLOWS IS ONLY BEING OFFERED TO AND IS ONLY INTENDED TO BE AVAILABLE TO PERSONS WHO ARE NOT RESIDENTS OF THE UNITED STATES AND (B) THAT CET AND ITS AFFILIATES WILL RELY ON THE ACCURACY OF THIS INFORMATION

Please read and agree to the following statements

Structured products are “complex instruments” this means that they will only be appropriate for you if you have sufficient knowledge and experience. In order to access the site you need to be able to agree to all of the following statements

  • I already hold other retail investments like funds, investment trusts or structured products
  • I consider myself to be a knowledgeable and informed investor
  • I understand the way that the investment return, the maturity value and any income are calculated by reference to the performance of underlying assets
  • I realize that I am not investing in the underlying assets but instead into a products whose performance is linked to these assets
  • I am prepared to invest into products where my capital is at risk
  • I have sufficient financial resources to be able to accept a loss on investments I make
  • I understand that the investment return and any coupon that I receive from structured products will depend on the performance of the underlying assets, and so I may not receive any investment return or income
  • The return of the capital may also be linked to the performance of the underlying assets.
  • I understand how this is calculated, and appreciate that the amount that you receive back when a product matures may be less than I paid for it
  • The defined value of each product will only be realised if the product is held to the maturity date. I understand that if I sell a product before the maturity date I will not get the defined value, and the amount that I receive may be less than the amount that I invested.
  • I understand that if the issuer is unable to meet their obligations to pay the amount due when the product matures, that I will not receive the defined value and will lose some or all of the money I have invested
  • I understand that there are charges built into structured products.
Individual Investor »
Professional Investor »
« Back
Agree »

Research & Analysis

Inside CUBE’s Dual Defensive Boosted Kick Out October 2020September 02, 2014 - 11:14

We explain here how CUBE developed its latest Kick Out product with a number of innovative features including:

  • Payment of a market-leading 26% potential return on the second anniversary (the date on which research shows it is most likely to kick out); and
  • A defensive 'dual final trigger' feature: in the event that the investments continues to its full six-year term, it has two kick out trigger levels: a trigger level at 100%, for a 60.7% potential return, and trigger level at 75%, for a reduced but still interest-rate-beating 26% potential return.
  • The capital protection barrier is 60% (European) on the worse performing index and investors are subject to the counterparty risk of Morgan Stanley.

    Investments that offer the possibility of an early redemption or Kick Out (also known as autocallable) are much the most popular kind of structured product in the UK. Of the 350 or so structured products issued to UK retail investors to date in 2014, around 230 have a Kick Out feature. Typically, these are linked to or two indices (generally including the FTSE 100) and have a maximum term of six years. They offer early maturities and a fixed return if the underlying market (s) is/are at or above a certain level on one or more anniversaries (usually beginning with either the first or the second anniversary). When Cube looked at creating a structured investment with kick out features, we looked at analysis from InvestmentProductResearch and evaluated a range of different product shapes and how they perform in different markets.

    KICK OUT PRODUCTS TEND TO KICK OUT EARLY

    Most of the time in back-tests and in randomised simulations based on historic data, kick out products mature at the first possible opportunity. We looked at the figures on kick out structures linked to major equity markets, the UK (FTSE100), Europe (Eurostoxx50) and the US (S&P500) and combinations of one or two of these. The chance of a kick out at the first opportunity (in either year one or year two), was in excess of 50%, while the chance of making it to maturity was around 15% for products with triggers at 100%. On the back of this analysis we looked to develop a product that maximises the return at the second anniversary. Taking as the basic building block of this product a return of 8.66% per year, we have added a bonus or 'booster' return: if the product kicks out in year two (which research shows occurs well over 50% of the time), the product pays out not two but three times 8.66%, ie 26%. If the product kicks out in year three it pays not three but four times 8.66% (ie 34.7%), if it kicks out in year four it pays not four but five times 8.66% (ie 43.4%), and if it kicks out in year five it pays six times 8.67% (ie 52%).

    In the event that the product kicks out in the final year, year six, another innovative feature introduced by CUBE comes into effect: the dual defensive final trigger. We describe this below:

    DUAL DEFENSIVE TRIGGERS

    A defensive trigger means that investors receive a return even if the underlying assets have fallen by certain amount; triggers can be the same throughout the term (non-defensive);or they can step down gradually or jump down at the end (in both cases termed defensive) to a level less than 100% but higher than the capital protection barrier.

    The trouble with this defensive trigger is that it costs the investor quite a lot. If a kick out product does not mature early then increasing the likelihood of receiving a return at maturity by lowering the trigger means the return at every potential maturity is reduced. Cube decided that although we would like to offer a defensive feature giving investors a return at maturity even if underlying markets have fallen, we would also like to maximise the return when the investment is most likely to kick out. To do this we have included (at the final maturity date) a dual defensive trigger at the final maturity date:

    1

    Trigger One pays a return of 60.7% if both indices are at or above their initial levels; this is equal to seven times the 8.66% annual return upon which this product is based - one for each year elapsed, plus the booster return.

    2

    Trigger Two pays a reduced return of 26% if either or both underlying indices fall by up to 25%. This is an annual equivalent rate (aer) of 3.9%, an interest-rate-beating return that we believe investors will be pleased with given that one of more markets fell over the period. You can see below how the double trigger of the DUAL DEFENSIVE BOOSTED KICK OUT OCTOBER 2020 provides investors with a tiered maturity payoff, which enables a higher potential return at earlier maturities.

    You can see below how the double trigger of the DUAL DEFENSIVE BOOSTED KICK OUT OCTOBER 2020 provides investors with a tiered maturity payoff, which enables a higher potential return at earlier maturities.


« Back
Simon Harris
  • Author

    Simon Harris

Simon has over 10 years’ structured investments experience, helping to develop the industry’s leading data and news service with senior roles in London and HK. He subsequently joined EFG Financial Products (Leonteq) before founding consultancy, Mu Capital. He writes and speaks extensively on structured investments, recently contributing the European chapter to Structured Products: Evolution and Analysis, published by Incisive Media.