Glossary - E
This section provides an explanation for some of the jargon used to describe structured retail products. If you would like us to add additional words then please let us know by clicking here.
“Entidad de Previsión Social Voluntaria de Euskadi”, Pension product available to residents of the Basque Country only.
Equity Indexed Annuity
US Insurance product where the principal investment is protected from losses, while gains are indexed to the rise in the equity market in a formulaic way.
Estimated Initial Value
Is equal to the sum of the issuer’s valuations of the components of the product, the bond and the embedded derivative(s), on the trade date. In Germany this value is called Issuer estimated value.
European Dividend Futures 2017 (USD) Index
The Index aims to replicate the returns of a notional investment in a euro-denominated listed futures contract traded on the Eurex Exchange (the “Futures Contract”) that has a final settlement price based on the EURO STOXX 50 DVP (the “Dividend Index”), while attempting to mitigate exposure to fluctuations in the value of the European Union euro relative to the U.S. dollar. The Index was developed by Solactive AG (the “Index Sponsor”), in coordination with JPMS, and is calculated, maintained and published by the Index Sponsor.
European Option or Style
An Everest type of structured product is one that typically returns a minimum of 100% of the sum invested at maturity plus a bonus equal to a fixed amount plus the worst performing underlying from a given basket of underlying assets or indices.
For example a typical product might have a five-year maturity and be linked to the FTSE100, Nikkei225 and S&P500. At maturity the investor would receive 100% of his initial investment plus a bonus equal to 50% plus the worst performing of the three indices. If all the indices rise then the potential bonus could be greater than 50% but if the worst performing index has fallen then this return is subtracted from the 50% figure although a minimum return of 100% of the investment is always returned.
So in this example, if the FTSE100 had risen 25%, the Nikkei225 had fallen by -15% and the S&P500 had risen 30% then the investor’s return would be 100% of his initial capital plus a bonus of 35% i.e. 135% of the sum invested.
A return based on a sophisticated combination of two or more product types. They include a wide variety of options with non-standard payout structures or other unusual features.
The date when the product ceased to be active, if different from the maturity date. For leverage products, this could be the date when the stop-loss barrier was breached. For other products, it could be for example the date when the product was withdrawn by the provider, ceased accepting new investors (for continuous products), or fulfilled an early maturity condition (i.e. knock-out) during the course of its investment.