Since the weak phase of mid-October 2020, the DAX has been able to recover significantly in recent weeks – among other things because of the hope that a vaccine against the corona virus will soon be available. For many market participants it seems to be only a matter of time when the DAX can rise to its all-time high from February 2020. For investors who do not want to fully share the optimism, an investment in structured products on individual DAX stocks could make sense, which will enable positive returns even with stagnating or slightly falling stock prices.
UBS is currently offering Express Certificates with fixed interest payments that investors can use over the next 2.5 years, even if the price of VW Vzg.- (ISIN: DE0007664039), Siemens- (ISIN: DE0007236101) and Adidas- Share (ISIN: DE000A1EWWW0) can achieve high returns. The certificates have a safety buffer of 35 percent. While the certificate on the Siemens share (ISIN: DE000UBS8733) promises an annual gross return of 3.15 percent, the certificate on the VW Vzg.-share (ISIN: DE000UBS8741) even enables an annual gross return of 5.30 percent. Using the example of the certificate on the Adidas share (ISIN: DE000UBS8725), the functionality of this type of certificate should be illustrated.
4.05% interest per year and 35% safety buffer
The Adidas closing price on December 22nd, 2020 is set as the starting value for the certificate. The barrier activated only on the final valuation date (22.6.23) will be at 65 percent of the starting value. Regardless of the price development of the share, investors will receive a fixed interest coupon of 4.05 percent per year (= EUR 20.25 per nominal value of EUR 1,000) for the first time on June 29, 21, on the half-yearly intervals.
If the share is quoted at or above the starting value on one of the valuation days, which are also set in the half-yearly interval, for the first time on June 22nd, 21st, the certificate will be repaid early with its issue price of 100 percent and the interest payment of 4.05 percent per year.
If the certificate expires on the last valuation day, the repayment will be made at 100 percent if the share is then quoted above the 65 percent barrier. If, on the other hand, it is listed at or below the barrier on 6/22/23, investors will receive a number of Adidas shares calculated on 12/22/20. The equivalent of Fractional Shares is credited to investors. The express certificates can still be subscribed until December 22nd, 2020.
CertificateReport conclusion: With the new fixed coupon express certificates for the three DAX stocks, investors can achieve annual gross returns of 3.15 to 5.30 percent in a maximum of 2.5 years with share price falls of up to 35 percent.
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