ABN AMRO and UBS in New York are marketing investment products which play on investors' concerns of equity or commodity market downturns. A structured investment official at another firm noted while bear-market plays are often a hard sell, his firm has received several inquiries for such deals in the last few weeks.
UBS has registered with the Securities and Exchange Commission a note which references a basket of the Russell 2000 equity index and the Standard & Poor's 500 index, offering 3% growth for every 1% drop in the basket's value at the end of a year. The maximum gain depends on final pricing, but is likely to be around 135%. Investor's principal will shrink by 1% for every 1% decrease in the basket, to a maximum loss of 50%. UBS officials declined comment before the note is priced at the end of the month.
The ABN AMRO note, alternatively, is a capped option on a crude oil futures contract. It also offers 3% growth for every 1% drop in the futures contract, to a maximum of 145% growth of principal invested. The downside of the note, however, is not capped and the investor loses out if the futures contract is above its initial value after one year. Chris Warren, head of private investor products marketing at ABN in New York, referred calls to the press office.
