Cube Investing is the first UK structured product provider to adopt Financial Conduct Authority (FCA) guidelines on risk disclosure, providing potential investors with a full range of independently-calculated risk metrics, back testing and stress testing.
The brochure (and Cube Report) for Cube’s Dual Defensive Boosted Kick Out provides a series of metrics including the chance of loss, chance of gain and the expected return of constant reinvestment in the product.
Although some providers have started providing some historic backtesting data, Cube is the first to publish all its results on simulated and historic tests as well providing clear descriptions of its calculations.
Additionally, Cube includes a volatility-based score such as the universal SRRI score used by all regulated collectives and has been mapped to the popular 1-10 risk scales used by many financial advisers.
"This information is not a nice-to-have; it’s a need-to-know”, says Cube’s chief executive David Stuff. “I don’t really understand how advisers and investors can make serious financial decisions without this information. But since the FCA’s decision to fine Credit Suisse and Yorkshire Building Society it seems to me that this is going to be the new normal."
The research, undertaken by InvestmentProductResearch.com (IPR), allows investors to gain insights into the risks and rewards of structured investments and to compare them with traditional collectives such as mutual funds, ETFs and unit trusts.
Dual Defensive Boosted Kick Out is an investment with a six-year term that will kick out (mature early) paying 26 per cent growth after two years if the FTSE100 and Eurostoxx50 are at or above their initial levels. If it does not kick out in year two, then it has an opportunity to kick out in years three, four and five, with the return growing by 8.66 per cent per year. If the investment runs to year six then then investors receive a return of capital plus 60.7 per cent if both indices are above their initial levels; or 26 per cent of one of the indices has fallen by up to 26 per cent. Capital is protection provided neither index has fallen by 40 per cent or more.