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Bonus Certificates
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Bonus Certificates are appropriate when the investor is basically positive about an underlying. He or she wants to participate fully in a positive performance but is aware that small to medium set-backs are not excluded. In addition, he or she wants to optimise the yield if the underlying is moving sideways.
Solution suggestion 1: Classical Bonus Certificate on individual equities and equity indices
Classical Bonus Certificates have a defined barrier and a defined bonus. If the barrier remains untouched and isn't understepped during the term, the invested amount is repaid plus a bonus or, if higher, the positive performance of the underlying. The yield of a Bonus Certificate is upwardly unlimited.
- Bonus Certificates are offered on all well-known equity indices and most of the "Blue Chip" equities. The barrier is usually 60%-85% of the issue price, and the bonus is often between 20% and 40%. The conditions are closely linked to the maturity, the currency and the volatility of the underlying. Consequently, very attractive conditions can often be achieved in cases of a long maturity, a high interest rate level and high volatility. However, as the options which underlie a Bonus Certificate are financed by dividends payable, the investor is denied the dividends distributed during the term.
Solution suggestion 2: Worst-of Bonus Certificate on several individual equities or equity indices
- Worst-of Bonus Certificates can be launched on all highly capitalised equities and equity indices. In addition to the classical Bonus Certificate, the conditions are dependent upon the correlation of the individual underlyings. Due to the higher risk in the case of the Worst-of Bonus Certifi-cate, the achievable bonus is often significantly higher than that of classical Bonus Certificates.
Solution suggestion 3: Bonus Certificate on dynamic basis values
As a further development of the classical Bonus Certificate on a static underlying, NPB New Private Bank Ltd. , in co-operation with specialised investment banks, also offers Bonus Certificates on a dynamic basket of underlyings. For example, from a defined range of equities, those ones are selected with show the best fundamental data such as the PE ratio or growth in profit. In accordance with a predefined process, these equities are newly put together on an annual basis.
- Dynamic baskets of underlyings offer the advantage that through the annual redefinition of the underlyings, there is qualitative maintenance or improvement. As an example, over-valued equities are removed and equities which are inexpensively valued are newly selected.
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