Hi Iqbal--given your expertise in the global markets, I would like to seek your advice regarding a product that is being offered by one of the major banks in the US. I should receive the prospectus tomorrow.
This is how it works:
An investment of at least $50K
Up to $100K will be FDIC insured.
The funds will be invested in the Nikkei 225
Investment period will be a maximum of 5 1/2 years
At the end of that period, one will be ensured of receiving at a MINIMUM, the original investment. The maximum amount that one will receive is the original investment + a return equal to 115% of the appreciation in the index from whatever the index is on August 28, to the point when the funds are liquidated. If one is willing to accept a guarantee of only 90% of the investment capital being returned, then the return would be 130% of the appreciation of the index from the level it is at on the 28th. In other words, if the index is at 15,000 on the 28th and 30,000 in 5 1/2 years, one would receive either $215K or $230K depending on which program one elects--assuming $100K original investment.
There is no currency risk for the investor--in other words fluctuations in the value of the currency will be not be borne by the investor.
I have not seen the prospectus--it is being Fed Exed to me. So I don't know if there are any other risks attached to the product--the above is what my broker -- who I have dealt with over many years-- detailed to me.
However, given that I am not knowledgeable about the Japanese markets, it seems a way to participate in that market with limited risk. Would you be so kind as to offer me your thoughts regarding the extent of downside that exists in that market--and what the potential upside might be over the next 5-6 years. If you had your choice of this or the WEB which would you advise for someone who does not have the knowledge or the expertise to follow the Japanese market closely.
Regards
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