Commerzbank has launched its first Rendement Certificates in the Netherlands. The certificates are the third new product type made available by Commerzbank to Dutch retail investors in the past six months having already introduced Twin-Win (July 2016) and Bonus Certificates (October 2016) last year, and, according to Christophe Cox (pictured), assistant vice president, derivatives public distribution Belgium and the Netherlands, more products will follow shortly.
"We have a number of other product types which we want to introduce in the Netherlands in the coming weeks and months. We are talking about product types which are already available in the German market," said Cox.
The first crop of Rendement Certificates, which, similar to Bonus Certificates, offer a predetermined return, are linked to the Eurostoxx 50 and have barriers of between 1,900 and 2,600 points, respectively.
"Rendement Certificates have a cap. That is the main difference with Bonus Certificates," said Cox. In case of a Bonus Certificate, the dividend of the underlying asset is used to build a conditional minimum return, according to Cox. "That can be used very dynamically. You could say the minimum return has to be, for example, zero, or 5%, or 10%, and at the same time you continue to participate in the rise of the underlying."
When it comes to a Rendement Certificate, however, there is no such thing as upside participation. "[With Rendement Certificates] you don't expect the underlying to rise significantly, at most you expect the underlying to remain stable, so you are not looking at any upward movements. Therefore you set up a cap which matches the maximum potential you expect," said Cox.
The investor should look at Rendement Certificates from a different point of view, according to Cox. "He should ask himself: what is the maximum possible return I could possibly achieve and what is the risk? The risk is mainly linked to the lower limit of the underlying, for example at 1,900 points of the Eurostoxx 50, and, attached to that, there is a guaranteed return.
"So that's a different philosophy. A Rendement Certificate is another product that can be used in a portfolio. Technically speaking, with a Rendement Certificate you will never get a return above the predetermined return while with a Bonus Certificate this could well be the case," said Cox.
The duration of the Rendement Certifcates is relatively short. Two of the four products issued earlier this month run until December this year, while the remaining two have a term until December 2018. "However, the idea is to issue these products with a slightly longer duration than for example the Bonus Certificates, said Cox.
Commerzbank opted for the name Rendement Certificates, instead of Capped Bonus Certificates, the name used by the bank in Germany, to maintain the uniformity in the Dutch market where BNP Paribas also issues Rendement Certificates. "We wanted to prevent yet another commercial name for the same product, but also to emphasize that this is a different product than the Bonus Certificates," said Cox adding that Capped Bonus Certificate is indeed the naming used in the Eusipa mapping.
With the first Rendement Certificates linked to Eurostoxx 50, Commerzbank is now looking to issue products on the local AEX-index, according to Cox. "That is the index most in demand in the Dutch market. Stocks are also a possibility we want to look at it in the future, but first the focus will be on the AEX-index."
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