HSBC Australia has launched the fifth product in its 100+ Series of structured investments linked to Chinese equities, and the first to use a volatility management strategy.
HSBC 100+ Series China Investment is a five-year deferred purchase agreement offering capital-protected volatility-based exposure to the iShares FTSE/Xinhua A50 China Index Exchange Traded Fund. Allocation between the underlying fund and cash will be dynamically managed by comparing the volatility level of the fund over the past 20 strategy valuation dates and the past 130 strategy valuation dates. The higher of these two values will be the volatility level of the fund on that strategy valuation date.
If fund volatility is equal to or lower than 20%, 100% of the strategy value will be allocated to the fund. If volatility is above 20% the allocation to the fund will be less than 100% of the strategy value and the balance will be allocated to cash. As volatility increases above 20%, allocation to the fund will decrease and the allocation to cash will increase. At maturity, investors will receive initial capital along with 94% participation (indicative) in the growth of the strategy value. The strategy value is subject to averaging over nine quarterly observation dates over the last two years of the investment term.
The offer extends until 29 October with a minimum investment of A$20,000 ($18,500). It is available from HSBC Bank Australia and independent financial advisers.
This product is available now in Recent Additions (Australia).