Investment bond
Good yield potential with a limited riskCapital-guaranteed investments let you seek yield with limited risk
Capital-protected investment bond is a product for savers and investors who do not want to risk their initial investment. The objective of the bond is to achieve a good yield potential with a low risk.
The return on the investment is based on the performance of the underlying asset
The underlying assets can include stocks, reference interest rates, currencies or commodities.
Investments are always based on a theme based on market conditions
Structured investment products are based on a theme that has been selected carefully based on current market conditions.
Products are only available for a limited time
Structured investment products have a specific subscription period. The subscription period is typically 1–2 months.
Investment bond lets you seek a good yield potential with a limited risk
Investment bonds are a safer option to equity investments and have a better yield potential than conventional bonds.
Investment bonds represent a capital-protected savings and investment solution with a higher target yield than savings bonds. They are suitable for investors who accept a limited risk.
A higher yield potential is possible thanks to the premium. Premium means that the bond is subscribed at above nominal value. For example, a 10% premium means that you pay €1,100 for an investment of €1,000. In favourable market conditions, the premium may enable an even higher return than direct equity investments. If the underlying asset performs poorly, the investor’s loss is limited to the premium. In the above example, if the underlying asset performs poorly, the investor is paid the full nominal value of €1,000 on the maturity date, with the premium of €100 constituting the maximum loss. In other words, the capital guarantee does not cover the premium.
Return rate and coupon-based investment bonds
We offer two bond structures under the investment bond product name: return rate and coupon-based. The two structures let you seek returns in different market conditions.
In a return rate based bond, the yield is based on the performance of the underlying asset, with positive performance multiplied by a return rate. In this structure, the maximum yield of the bond is usually limited. For example, up to 30% of positive performance may be taken into account.
In a coupon-based bond, the yield is also based on the performance of the underlying asset. However, if the performance is within a predefined range, the investor is paid a higher coupon than the asset’s performance. In the coupon structure, maximum yield is usually not limited. Thanks to the coupon, investors can receive a yield even if the asset’s performance does not change during the term to maturity.
The maturity of investment bonds usually varies between 2 to 5 years. In normal market conditions, you can sell your investment during the term to maturity. In this case, contact your OP cooperative bank.