Trustnet Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email [email protected] in the first instance.

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Structured Products



Concept

What makes a structured product?
As we have noted above, each structured product is tailored to meet a particular set of circumstances. The offering can be as simple as a bond deposit with one bolt-on feature. This is a way of protecting your initial outlay while still plugging in to the possibility of it earning more than the APR on your building society account. Let's see how this might happen:

Common Features
In its simplest form, a product will be a time-circumscribed deposit with a provider, who will invest it in at least two underlying assets designed to provide:
- a degree of capital protection, from a risk-free deposit that is guaranteed to return all, or a proportion of, the investor's initial outlay,
- growth or income potential from a riskier underlying asset.
How they work: the basic structure
The investors' money is treated in two ways: firstly, the provider will use the major proportion of it to buy a zero coupon bond. The bond is intended to return a fixed amount at a specified point in the future, and that amount can be set to match the investors' original investment, or a proportion of it. This is the capital protection element of the product.
Since the bond is 'zero coupon', i.e. it will not pay any interest in return for the use of the investors' money during its lifetime, the amount required to secure the level of eventual return is worth less in today's terms. This 'present value' of the future return will vary according to the period involved and prevailing interest rates - the longer the period and the higher the rates, the lower is the cost of the bond that provides capital protection. This leaves a residue from the total sum invested. So, secondly, the product provider uses this residue to buy the other, income- or growth-producing, component in the structure.
This component will be a form of participation in a market which is intended to produce higher potential returns than would be available from 'risk-free', fixed interest investments. The availability of financial derivatives means that the providers' research teams can take an informed view on how markets are likely to perform in the future, and place a bet on that view. If they're right they make money; if they're wrong the capital invested is still protected to a greater or lesser extent. The bet is called an option.
The two best known forms of option are 'put', and 'call'. An option confers a time-limited right, but not a legal obligation, to trade in an asset, whether it be indices, like the FTSE 100, equities or some other instrument with a quantifiable market value.
Put Options: If a provider takes the view that, say, Vodafone shares are destined to lose value over the period of the structured product's life, they will use the residual investment fund to buy a put option from an investment bank. The option establishes a 'strike' price at which the option seller must buy a predetermined number of Vodafone shares upon maturity of the option. If the Structured product provider is correct in its forecast, it will acquire the shares necessary to complete the contract more cheaply than the strike price, and sell them to the investment bank at a profit.
Call Options:
Now assume that, to remain with our example, it is believed that Vodafone shares are going to rise in value over the period. With a call option, the owner has the right to buy Vodafone at the strike price. With the market value higher than the exercise price, the shares are bought under the option then sold at a profit in the open market.
The institutions who offer these options clearly need to make their own profits, and a premium is charged on each contract they sell. There is also the possibility that the option will not be exercised: this possibility increases with the narrowness between the market price and the strike price after fees.
These two elements are the basic components of a simple structured product. The provider will vary the proportions of capital protection and market participation to offer a specific risk/return profile. Essentially, the more capital protection, the less upside participation will be offered.
Variants designed for specific outcomes
For ease of explanation, our options examples above used a single stock as an illustration, but the underlying asset in a simple product is more likely to be an index, such as the FTSE 100.
In this earlier guise, the added-value component of the structures tended to be straightforward directional bets: will the underlying asset go up or down? Now, with more creative design and an accent on the benefits of asset allocation, providers are mixing asset types to reduce volatility, and to counter downside with a corresponding upside elsewhere.
So, while the FTSE 100 has been a commonly-used asset in these products, the index is weighted, and dominated by companies in four sectors: telecoms, banks, oil and pharmaceuticals. This does not do much for diversification, and there is now a trend towards combining a proportion of FTSE 100 exposure with participation in another investible index, such as the S&P 500, or the Eurostoxx 50.
Also, other underlying assets of different types are being used in combination, and assets not available to conventional onshore funds are increasingly making an appearance. There are now products tailored to invest in a specific basket of equities, in commodities, foreign exchange and hedge funds.
Then, while most of these products have fixed terms, a new breed is gradually becoming familiar, in which a 'kick-out' clause is invoked to terminate the scheme when its return objectives have been met. So, although these schemes carry a nominal maximum period, they have the option of closing and paying back their investors if they have done particularly well, and achieved their projected returns earlier than expected.
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