Investment Deposit 273 – UBS Currency Strategy EUR with Risk Premium
Investment Deposit 274 – UBS Currency Strategy USD
These Investment Deposits are term deposits of AS SEB Pank (SEB), which allow investors to earn high interest rates if return on the shares of three Swedish companies is positive after a year has passed. The principal amount of the deposit is 100% protected until the end of the deposit period.
| Start date of deposit: | 14.04.2010 |
| End date of deposit: | 30.04.2013 |
| Principal amount guarantee | 100% |
| Entry into contract | Free of charge |
| Underlying asset | UBS V24 Carry Index (Bloomberg Code: UBCIV24) |
| Minimum deposit amount | Investment Deposits 272 and 273: 100 EUR Investment deposit 274: 100 USD (the deposit amount must be a multiple of 1 EUR or 1 EUR) |
| Risk premium | Investment deposit 272: none Investment deposit 273: 10% of deposit amount Investment deposit 274: none |
| Share in the price increase of the underlying asset | Investment deposit 272: 40–50% Investment deposit 273: 150–170% Investment deposit 274: 33–43% |
The yield of Investment Deposit UBS Currency Strategy is tied to the index prepared by UBS according to the following principles: investments are made into currencies with higher interest rates (long position) and loans are taken in currencies with low interest rates (short position). Such transactions are called carry trade.
The UBS currency strategy consists of 12 currencies selected from 24 different currencies in the following groups:
| Group 1: G10 | ||
|---|---|---|
| Australian Dollar (AUD) | Canadian Dollar (CAD) | Euro (EUR) |
| Japanese Yen (JPY) | New Zealand Dollar (NZD) | Norwegian Kroner (NOK) |
| Swedish Krona (SEK) | Swiss Franc (CHF) | British Pound (GBP) |
| US Dollar (USD) | ||
| Group 2: South America and Africa | ||
| Brazilian Real (BRL) | Mexican Peso (MXN) | South African Rand (ZAR) |
| Group 3: Emerging Europe | ||
| Czech Koruna (CZK) | Danish Krone (DKK) | Hungarian Forint (HUF) |
| Iceland Krona (ISK) | Polish Zloty (PLN) | |
| Group 4: Emerging Asia | ||
| Indian Rupee (INR) | Indonesian Rupiah (IDR) | South-Korean Won (KRW) |
| Philippine Peso (PHP) | Singapore Dollar (SGD) | Turkish Lira (TRY) |
The currencies are selected and ranked on the basis of their interest rates for 1 month. The long position is taken in the six currencies with the highest interest rates (at least 1 in each group) and the short position is taken in the six currencies with the lowest interest rates (incl. at least 2 currencies from the G10 group). Changes in the list of the 6 currencies with the highest and the lowest interest rates are monitored daily and they are replaced in the strategy if necessary. The strategy also uses a volatility filter whose indicators are the basis for liquidation of positions if the volatility indicator exceeds the pre-determined limit or restoration of positions if the relevant indicator drops below the pre-determined level.
Why should you invest in the Investment Deposit UBS Currency Strategy?
- It is an investment with capital protection
- It is a good opportunity for dispersing the portfolio as this solution is not directly dependent on price changes on the stock market
- Allows investors to earn income from the differences in the interest rates of different currencies
- The strategy contains a geographically broad selection of currencies
- Interest income is not guaranteed
- You may lose the risk premium you paid on deposits with a risk premium
- The movements of currency exchange rates are influenced by many circumstances some of which are unpredictable, which is why the strategy may not work in all situations
Rates of return in previous periods do not constitute a promise or an indication of the rates of return in future periods.
Source: Thomson Reuters
The rate of return of Investment Deposit UBS Currency Strategy in the last five years (simulated until the launch of the index in November 2007) has been compared with the historical rate of return of the World Equity Index in the graph. The MSCI World Index, which is quoted in dollars, is used as the World Equity Index.
The investment deposit comes with a 100% guarantee
If you keep your money in the deposit until the end of the deposit period, SEB will pay at least the principal amount of your deposit back to you. Please read the terms and conditions of the deposit guarantee stipulated in the Guarantee Fund Act on the bank’s website at www.seb.ee/investorkaitse in association with the possible realisation of credit risk.
Investment deposits can be opened in euros and US dollars. Estonian kroons and euros are converted when the deposit is opened and closed, using the EUR/EEK central rate established by the Bank of Estonia.
The contractual and offer terms of investment deposits are available on the SEB website at www.seb.ee and at all SEB branches. You can also make an appointment for an additional financial consultations at any branch. Investment deposit contracts can be signed in our Internet Bank and at our branches.
WARNING: This material alone is not sufficient for making final investment decisions! Before making a final investment decision, please read the terms and conditions of the investment deposit contract, the terms and conditions of the offer and the information on the SEB website at www.seb.ee/investorkaitse, particularly the important information about the potential risks associated with the product, very carefully and consult an expert if necessary.
This offer is valid from 5 March 2010 until 12 April 2010.
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