Irish provider Bespoke Investment will have an opportunity to roll out its Protected Gold Bond which matured last week delivering a return of 150% to investors after three years of investment. The capped call-based structured deposit was linked to the price of gold and raised €3m in 2009.
John McDonnell, MD at Bespoke Investments, told SRP that the firm's strategy was to offer investors exposure to gold with capital protection at a time of great uncertainty in the marketplace.
"It was the view of Bespoke Investments Limited that, with the likely introduction of quantitative easing into the marketplace, fiat currencies globally were going to come under pressure and that there was a strong likelihood that the price of gold could at least double in such an environment," he said. "Pricing dictated that we were able to offer only 90% capital protection with returns capped at 50%; however the returns, we would suggest, were more than acceptable over that time period and astute investors who had the foresight to invest in the bond have been justly rewarded."
The product offered a minimum capital return of 90% at maturity plus 100% participation in the rise of the underlying over the investment period, subject to an overall capital return of 150%. The final underlying level was calculated as the average of monthly readings taken over the final six months of the investment period.
SRP data shows that 2013 has started rather slowly for the Irish market with a relatively low level of issuance and sales. According to a number of providers, it is difficult to structure attractive products at the moment due to unsteady market conditions and low funding rates.
"There's no doubt that the current low interest rate environment is going to put downward pressure on demand for traditional deposit-based trackers, which have been the flag bearer of the industry," added McDonnell. "However, the industry will most likely adapt and become more specialised with soft-protected products playing more of a role, at least in the near term, where lower deposit rates and an increased appetite for risk will dictate the new product offerings."
Bespoke Investments has launched two precious metals and commodities bonds so far this year.
According to SRP, there are no current offers linked to commodities although there are five structures linked to commodities due to reach maturity by the end of the year.