With the rise in interest rates and the volatility of the financial markets, the products structured with guaranteed capital sign their comeback. Should we be tempted by these performance promises between 5 % and 12 %? Vigilance remains in order.
by
After a few years of absence, the funded funds with guaranteed capital return to the front of the stage. For the record, this financial product (formerly called “formula” or “promise”) proposes to deliver at the end of a period of five to twelve years, a remuneration conditioned for the evolution of a stock market index, thematic, or a basket of actions. Its construction is based on the following principle: to take advantage of part of the increase in this index while being protected from a violent drop, and be guaranteed to recover all or part of its initial investment.
On paper everything seems simple, because the trade brochure of the structured product describes everything in advance. Several scenarios (favorable, unfavorable) are presented with results with variable geometry. In January 2022, only funds with partial capital protection were marketed. With the return of the guaranteed funds, we are sure to recover its initial bet to the “tumble” of the product.
How is this equation again possible? “The current situation offers a perfect combination for the manufacture of this kind of product, because all the ingredients are there: high market volatility, a strong rise in interest rates and a burst stock market”, explains Fabrice Cohen , Responsible for structured solutions at Generali Wealth Solutions.
It must be said that the generation yields of products currently issued may seem attractive: 5 % to 6 % per year for a guaranteed capital product over ten or twelve years; 10 % to 12 % per year for a protected capital product lasting five to six years. “In period of high inflation and when the stock markets and bonds are unattractive, these promises seduce,” recognizes Jean-François Bay, director general of Quantalys.
gas factory
Now numerous on the market, these funds are accessible from 1,000 euros. They can accommodate your choice in a life insurance, capitalization or securities account. Although this product protects all or part of the capital, its mechanics is not magic, and it has drawbacks to be identified before engaging.
First, despite the many pages of prospectus, this hybrid product is not easy to understand. Its detractors also qualify this placement of “gas factory”.
Thanks to innovative financial engineering, some vehicles offer guaranteed yields issued in the form of coupons (annual, quarterly), even when the markets lower, at least up to a certain level. “If the stock market context is bad, the coupons are not paid. But they are not completely lost. We keep them in memory for later, in case the market becomes positive again,” decrypts Brice Gimeno, president of DS Investment Solutions .
You have 46.93% of this article to read. The continuation is reserved for subscribers.