In a context of market volatility and high inflationmore and more Peruvians venture into the world of investments and mutual funds to make your money profitable. For this reason, during World Investor Week (IOSCO WIW 2022), tybathe investment platform of the BCP which works as a digital channel to easily and quickly access investments through mutual funds managed by Credicorp Capital SA SAF, explains how structured products work to take them into account as attractive investment alternatives:
- They are composed of two or more structures: the first, for a fixed-income asset that allows for the conservative or low-risk component of the investment; and the second, by the variable income asset (underlying asset) that allows to boost performance. They are investments where the capital has indirect exposure to other assets such as bonds or shares.
- Take advantage of specific market opportunities: These types of products only appear when market conditions are attractive enough. This means that they are not always available to investors, therefore, they have a set term and limited time. The ideal is to take advantage of it.
- They protect the capital against market falls: They have the advantage of protecting the capital invested at the expiration of the term thanks to their first component: investment in fixed income. This allows for a total or partial return of the initial capital. Some of these structured products, depending on their conditions, could protect up to 100% of the capital invested, even when the underlying asset performs negatively.
- They are illiquid: As this type of product has an established term and is for a limited time, the investor must maintain his investment for a specific time to access the capital and its possible profitability. Now, the investor could make an early withdrawal, but this is not recommended because he would not be able to reach the term with the objective of profitability or protect his capital and would have to assume a penalty.
At what point are these types of products attractive to investors?
The demand for this type of structured product varies according to the clients’ objectives: when they want to protect their capital and maximize profits, have some type of exposure to risky assets in a more conservative manner, obtain a return above deposits in term, benefit despite market declines or wish to expose themselves to greater risk, but with protection of their invested capital.
What types of structured products exist?
There are 3 types of structured products: i) distribution products, which seek to generate flows – something like periodic coupons – conditioned to the fluctuations of the underlying asset; ii) those of participation, which seek to participate with a multiplier in a rising or falling market; and iii) those with protected capital, these have a much more conservative objective to obtain 100% protection, allowing investors to expose themselves to the underlying asset with a low risk position.
Therefore, taking advantage of the market situation, tyba enabled, for a limited time, a mutual fund structured in soles that allows investing in the S&P 500 while protecting 100% of the capital. This background is called Credicorp Capital Conditional Barrier Soles VII and it is found in the app as Fund with Protected Capital in Soles. The minimum investment is S/1,000, it has a maximum expected return potential of up to 15.50% and it is enabled until October 7 for new clients (those who have not yet made their first investment in tyba) and until October 12 for old customers of the app (those who already have 1 or more investments in the app).
“We want to offer our users the best investment alternatives. This fund has an underlying exposure to the S&P 500, the world’s benchmark stock market index, which follows the 500 largest companies in the United States, such as: Apple, Amazon, Microsoft, Tesla, Alphabet, Berkshire Hathaway, etc., therefore which is highly attractive to clients looking to invest in risky assets more conservatively”, indicated Jose Ibarra, Chief Experience Owner of tyba.
