Investors will receive par if the basket falls by 20% or less and will be exposed to any decline beyond 20%.
“This is for someone who wants to remain positioned in metals but doesn’t want to take the downside risk,” said Keith Springer, financial adviser at Springer Financial Advisors in Sacramento CA.
“They’re getting 20% downside protection” but are subject to the cap. “They’re not getting the bang for the buck, but they still want to play it,” he said.
Springer noted that the notes would only be attractive to conservative investorswith a moderately bullish outlook on commodities.
“They’re going to miss out on the big ride – 125% to 150% over five years is not that much in commodities. It sounds like alot, but it’s not.”
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