The performance of RCB Guarantee and Bonus Certificates in comparison with a direct investment into the underlying, i.e. indices, shares and commodities was examined. Subject of the study were 89 certificates in subscription and their performance from 2009 to 2013.
Generating yield in challenging markets
“Since the onset of the financial crisis in 2008 with the insolvency of Lehman, the environment on the markets has changed drastically. Investors are more focused on safety and transparency, a trend that is clearly reflected in the range of issued products. Investment products with capital protection, i.e. Guarantee Certificates, as well as Bonus Certificates with partial protection, are facing strong demand in Austria. Open interest is currently composed of 75 per cent guarantee products and 24 per cent investment products without capital protection, with Bonus Certificates accounting for the main share thereof. Henceforth, our study focused primarily on these product categories“, explains Heike Arbter, Deputy Direktor and Head of Structured Products at RCB.
Certificates outperform underlyings
The study clearly shows that even with low risk investments (capital guarantee at the end of the term in Guarantee Certificates, or conditional safety mechanism until the barrier in Bonus Certificates) investors obtain a higher average return than with the underlyings. The average yield in Guarantee Certificates comes up to 3.16 per cent p.a., whereas the underlyings record an average performance of solely 1.55 per cent p.a. Bonus Certificates show a similar picture. In the period under review, the performance of Bonus Certificates comes up to 8.81 per cent p.a., whereas the underlyings generate an annual profit of merely 6.25 per cent.
Certificates - an integral part of every portfolio
Investors requiring capital market products have been adding certificates to their portfolios yet for a couple of years in order to enhance their profit opportunities. According to Heike Arbter, every investor has the opportunity to generate sound profit with certificates, particularly in the currently low interest rate market environment. “The study has shown that certificates with capital protection as well as certificates with partial protection convince with their performance- even though the risk is far less than in a direct investment into shares or indices. I am convinced that in the future investors will recognise the added value of certificates“. The comparison will secure investors.
About Raiffeisen Centrobank AG
Raiffeisen Centrobank is a leading Austrian investment bank offering the full spectrum of services and products associated with stocks, derivatives and equity capital market transactions, both via the stock exchange and off market, with a clear focus on the CEE region and on Turkey. Supported by its Raiffeisen Investment network, the bank offers top class ECM and M&A advisory services. In addition, the bank offers exclusive and customised Private Banking services. Raiffeisen Centrobank is a 100% subsidiary of Raiffeisen Bank International AG.
For further information, please contact:
Andrea Pelinka-Kinz
T: +43 (0) 1 51520-614
E: pelinka-kinz(at)rcb.at
