Investors in Canada Life's Nasdaq-linked structured products are facing losses of almost two thirds ...
Investors in Canada Life's Nasdaq-linked structured products are facing losses of almost two thirds of their capital as the products' maturity dates draw closer.
Canada Life's High Income Bond 3 and Platinum Income Bond, both based on the performance of the Nasdaq 100 over a three-year term, reach maturity next year. At current market levels, High Income Bond 3, due to mature next April, will net investors a 63.4% loss. Platinum Income Bond, maturing next July, would lose investors 62.6% at current levels and requires a 214% recovery by the Nasdaq 100 to return initial capital. Both products were launched offering 20% hard protection, but no return if the index slipped by over 50%, so initial capital has all been eroded away.
Canada Life's High Income Bond 2, maturing this December, is also likely to lose investor's capital unless the Dow Jones Eurostoxx 50 climbs 156.3%. The product at current levels would return 66% of invested capital, 33% of which is growth.
Structured products from NDF and Scottish Mutual based on the Eurostoxx are also facing heavy losses, according to a study conducted by Chelsea Financial Services.
NDF's Eurostoxx-based Extra Income and Growth Plans 1 and 2, both maturing next March, need an index rebound of over 150% to return invested capital.
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