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Classic products

This type of product appeals to investors who are planning to invest a large amount of funds over an extended period of time.

The potential profit is unlimited and depends only on the yield from the amount invested in riskier assets and the participation rate. Classic products can be used to profit from either a rise or fall in the value of the base asset.

Example: classic product

Let's say you purchase a classic product, selecting gold as your base asset (initial price: 1,600 USD an ounce). You choose the product maturity date, predict that the price of gold will "rise" and set the capital protection level at 95% (guaranteeing that you will get back at least 95% of your investment at product maturity).

35%
30%
25%
19.5%
15.75%
10%
5%
0
-5%
-10%
  • Price of gold
  • Return on investment of product in example with 95% capital protection
  • Return on investment of product in example with 100% capital protection
  • Potential return on investment of a product with 95% capital protection
  • Potential return on investment of a product with 100% capital protection
  • Investment period

Based on the parameters you have chosen, your product is assigned a participation rate of 1.4.

If the price of gold rises from 1,600 to 1,880 USD (i.e. 17.5%), the investment in the riskier assets will earn a 24.5% return (17.5% × 1.4 = 24.5%), bringing the overall return of the structured product to 19.5% (95% + 24.5% = 119.5%). If, however, the price of gold were to fall, you would simply get back 95% of your initial investment.

Now let’s go back and change the capital protection level in the example to 100%. The participation rate drops to 0.9. Now the 17.5% rise in the price of gold delivers a 15.75% return on the investment in riskier assets (17.5% × 0.9 = 15.75%). At product maturity, the structured product has achieved a 15.75% return on investment (100% + 15.75% = 115.75%).

If the price of gold were to fall, you would get back 100% of your initial investment.

Invest in a classic product

FAQs

Here are some of the questions we get asked most often about structured products:

For more, please see our entire list of structured product FAQs.

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Attention:

  • The examples above are meant only to show how structured products work. The returns earned in the examples should not be construed as a guarantee of profits.
  • You may purchase structured products denominated in Russian rubles and US dollars.
  • The commission charged for investing in a structured product is 2% of the asset value. Commission is deducted at product maturity.
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