Bristol & West, a U.K. bank owned by the Bank of Ireland, is selling a capital guaranteed dynamic bond to retail investors. Laurence Sanders, treasury product advisor to Bristol & West in Bristol said JPMorgan structured this product using OTC call options on the FTSE 100.
The six-year bond, known as the Dynamic FTSE Guaranteed Equity Bond, will give investors variable participation of up to 150% upside performance of the FTSE 100. Investors' principal is 100% guaranteed. JP Morgan achieves the dynamic structure by varying the participation of the invested capital between cash and call options of varying maturities depending on the performance of the FTSE 100. JP Morgan also bears the risk of the capital guarantee.
Bristol & West offers global guaranteed equity funds on the Standard & Poor's 500, the Swiss Market Index, the FTSE 100 and the Nikkei 225.
