01 July 2013

New Fund: OSK-UOB Capital Protected Essentials Fund

As the world population continues its growth led by the emerging countries coupled with the higher purchasing power, the demand for the essentials or basic commodities (i.e. those that we use daily such as cotton for clothing, corn and sugar for food, crude oil for energy) have significantly increased. Further, with the imbalance of increase in demand and slower growth in supply, this has also resulted in a situation where consumers now and going forward have to pay more for fuel, clothing and food.

With the expectation of further increase in the prices of these essentials or basic commodities, OSK-UOB has established a fund that will capitalize on the price movements of these essentials or basic commodities, which is OSK-UOB Capital Protected* Essentials Fund.

Fund Asset Allocation:

Indicative Asset Allocation

Over The Counter (OTC) Option:
A 4-year option whose underlying reference is a basket of 4 commodities, i.e. Brent Crude Oil, Cotton, Sugar and Corn, and each commodity is represented by a listed futures contract.

Why it also called "Memory Option" ?
This is because the option is structured to provide 4 annual coupon payments during the tenure of the fund, if at the relevant observation date, all of the 4 underlying reference commodities prices are greater than or equal to their initial reference prices determined at the commencement date of the fund. It has a "memory" component i.e. the annual coupon payable can be carried forward if it failed to met the conditions for a particular year.

103% Capital Protection?
Yes. The capital protection covers the investors' capital investment and includes the 3% sales charge payable by investors.

Hence, the fund is suitable for investors who:

  1. have a low risk tolerance;
  2. seeks capital protection*;
  3. seek potential returns from commodities essential to our daily lives;
  4. have a medium term horizon; and
  5. seek income

Source: OSK-UOB Investment Management

* Investors are advised that the fund is not a guaranteed fund. Capital protection is provided through investments in ZNIDs and not by a guarantee. Consequently, the return of capital is SUBJECT TO the credit/default risk of the issuers of the ZNIDs and may result in losses.

1 comment:

  1. This article is mind blowing I read it and enjoyed. I always find this type of article to learn and gather knowledge.

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