INTRODUCTION
Invess proudly presents the Capital Protected Exposure Note (CPEN), a sophisticated financial instrument that seamlessly integrates capital protection with the potential for significant market exposure returns. Tailored to meet the needs of accredited and institutional investors, the CPEN is a hallmark of financial innovation, offering a prudent investment solution in the face of market volatility and uncertainty.
CORE COMPONENTS OF CPEN
Capital Protection Component
Definition
The foundation of the CPEN is its Capital Protection Component, which is a debt obligation issued by a reputable entity, such as a top-tier bank or a regulated issuer with a strong credit rating (BBB or above). This component is a promise on the issuer’s balance sheet to repay the investor’s principal at the note’s maturity, independent of the market performance of the return-generating asset.
Characteristics
- Variable Capital Protection: The level of capital protection is adjustable, allowing issuers to tailor the CPENs according to the investment objectives and risk appetite of the subscribers. This flexibility enables a strategic calibration of exposure to the underlying assets, optimizing the balance between risk and potential return.
- Guaranteed Principal Repayment: Despite market volatility, the issuer guarantees the repayment of the protected principal amount at maturity, offering a layer of security to investors.
- Issuer’s Creditworthiness: The assurance of capital repayment is as robust as the financial health and credit rating of the issuing entity.
Market Exposure Component
Definition
The Market Exposure Component is what generates returns for the CPEN, based on the performance of a selected underlying investment universe, called the Reference Asset. This universe can span across various asset classes, including but not limited to cryptocurrencies like Bitcoin (BTC), stocks such as Tesla (TSLA), or any other highly liquid single equity, indices like NASDAQ, commodities like Gold, or ETFs such as the Invesco QQQ Trust (QQQ), as long as the exposure is available to the issuing bank either in futures, options or similar derivatives.
Characteristics
- Performance-Linked Returns: The investor’s return is directly tied to the performance of the Reference Asset, with positive movements offering potential gains.
- Customizable Exposure: Institutional Investors have the liberty to choose their level of exposure to the Reference Asset’s performance, facilitating a tailored investment experience that aligns with their risk tolerance and financial goals.
- Diverse Investment Options: Offering a wide range of asset classes for underlying investments, CPENs cater to varied investor preferences and market outlooks.
REDEMPTION & TOTAL RETURN
Redemption
Recognizing the need for flexibility, the issuing bank may offer investors the option to redeem their CPENs prior to maturity at the market price prevailing at that time. This feature provides investors with an opportunity to respond to changing market conditions or personal liquidity needs.
Total Return
The total return of a Capital Protected Exposure Note at maturity encompasses the repaid capital (adjusted for the level of protection) plus any positive returns from the underlying asset’s performance. This innovative structure makes CPENs an appealing option for investors aiming for market participation with a protective buffer against losses.
SUITED FOR UNSTABLE MARKETS
Designed with the unpredictable nature of contemporary markets in mind, the Capital Protected Exposure Note offers a strategic investment alternative. It appeals to conservative investors desiring exposure to potentially higher returns without risking their principal amount and to any investor looking to diversify with a product that provides both security and the opportunity for growth.
CONCLUSION
The Capital Protected Exposure Note (CPEN) by Invess embodies a strategic blend of security and market exposure, offering a dynamic approach to investment in volatile financial landscapes. By allowing variable capital protection and the possibility of early redemption, Invess ensures that CPENs meet a broad spectrum of investor needs, offering a robust yet flexible investment solution.