Societe Generale launches structured product for retail investors
Societe Generale has launched Step Down Autocall 12, the first in a new series of structured products designed specifically for the retail investment market.
It provides investors with the opportunity to receive a return equivalent to 12 per cent per year, gross (not compounded), even if markets fall.
The new Step Down Autocall 12 (SG01) has a six year investment term, but can expire early, and pay a return equivalent to 12 per cent gross (not compounded) in any year of the investment from year one onwards. Markets do not have to rise for this to happen. In fact, the three major UK shares that determine the return (Tesco, Rio Tinto and British Telecom) can fall by up to 50 per cent over the investment term, and investors can still receive a maximum gross return of 72 per cent at maturity in 2019.
To expire early, the share price of each company must match or exceed a pre-defined “Kick Out Level” on one of five annual valuation dates. The Kick Out Level reduces each year to increase the chance of an early payout.
If the Step Down Autocall 12 has not expired before, it will mature on 5 April 2019, generating the maximum gross return of 72 per cent as long as the share price of each company has not fallen below 50 per cent of their initial level recorded on the initial valuation date (22 March 2013).
If any one of the share prices has fallen by more than 50 per cent on the final valuation date, capital is at risk, and investors would lose a proportion of their initial investment as if they had invested directly in the worst performing stock at the initial level. For example, if the worst performing share price was down by 60 per cent on the final valuation date, investors would receive GBP400 per unit back from the initial price of GBP1,000.
The Step Down Autocall 12 can be purchased like a share through any UK stockbroker at a fixed price of GBP1,000 per unit until 22 March 2013 in a dealing account, SIPP or stocks and shares. From 26 March 2013, the Step Down Autocall 12 will be listed on the London Stock Exchange with live pricing during market hours.
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