Hi Tom, hope you got the info you were looking for re: the Nikkei product.
Iqbal and Jack brought up some good points. Whether you choose this product or ADR's really comes down to your outlook re: the Japanese equity market, and the yen. If you feel the market & the yen has bottomed, you're probably better off in ADRs or an unhedged japan fund, since it'll let you participate fully in the upside of the equity as well as the currency.
This product, on the other hand, hedges you against currency movements.
If you're still interested in the structure of this product, you'd create it by buying a treasury strip, which sells at a discount to par, and use the discount to buy in the money JPN calls. At maturity, you get your principal back, and participate in the upside of the JPN to the extent of your delta. There is phantom income, though.
The advantages of doing it yourself is that you bypass broker fees and charges, and you can also unwind the position at any time without penalties, something i believe you cannot do with the broker product.
Hope that helps.
Vince |
