Cantor Fitz Capital Secure Dividend Aristocrats Bond II

Olivetti

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Any views about this bond, details on their website. Can't post link due to the site rules - I'll have to up my posting rate.

It's a 3 year 11 month product investing in a basket of approx. 50 well-known US stocks, all dividend payers and growers historically.

There are two options - (a) 100% guaranteed and 50% participation, and (b) 90% guaranteed and 140% participation. The dividends accrue to the product and are reinvested. They're using a volatility-controlled version of the index (a little odd for a product that is itself guaranteed), and the product is structured as a deposit with KBC. I assume this means it is covered by the Deposit Guarantee Scheme up to €100,000 - I've asked them to confirm this but haven't heard back yet. No caps on either individual or overall performance. Subject to DIRT on exit.

I am particularly interested in this because I own a few of these stocks myself directly, and am in reasonable profit on them. I've been thinking for a while of selling them, due to concerns about the level of the market generally, but have held off because I can't find anywhere more attractive to put the money. Liquidating my direct holdings and investing in the 90% version gives me continued (in fact, 40% geared) exposure to the same investment premise, and puts a 10% limit on my downside if it doesn't perform.

The only downsides I can see are (1) the non-flexible holding period - I'm committed till mid-2017 no matter what, (2) the volatility control will dampen returns in a rising market, and (3) there's averaging at the end which will have the same effect. But overall I think it looks like a neat solution to the investment dilemma I've been pondering. There's an intermediary commission which I'm hoping they'll rebate - again haven't heard back on this.

Any other thoughts? Am I missing anything?

Thanks in advance.
 
Dividend Aristocrats

There is no longer any value in any of these products - this is because interest rates are so low.

I thought the participation rates were far too good to be true especially with dividends forming part of the potential return : however the appearance of a Risk Control 'feature' explained that.

Without knowing how the risk control mechanism works it is impossible to compute the probabilities of outcomes but I am quite sure that a similar economic exposure could be achieved with much more favourable odds for the investor.(A deposit and dividend aristocrats ETF).
 
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