What types of capital
protection are there?
Some structured products offer capital protection. The level of this protection is fixed
by the issuer when the product is issued and indicates the percentage of the nominal
value that will be repaid to the investor on expiration. However, capital protection
generally only applies at the end of the term and may, depending on the product conditions,
be (far) lower than 100% of the invested capital.
What does the capital
protection relate to?
The capital protection is linked to the nominal value rather than the issue price or
purchase price. Hence, if the issue/purchase price you pay exceeds the nominal value,
only the nominal value is capital-protected. The protection of your capital outlay
drops accordingly. If, however, the issue/purchase price is less than the nominal value,
the protection of your capital outlay rises accordingly.