D.A.C.
Dynamic Allocation Certificates are financial instruments which combine capital protection, dynamic asset allocation and strategy securitisation within the legal form of a certificate. A series of baskets of UCITS have been identified, specialising in markets and sectors within specific areas such as China & India, Water & Renewable Energies, Asian Property & Infrastructure, Health & Safety and Private Equity & Special Situations.
For each area, Abaxbank creates specific certificates with underlying UCITS that are selected and managed using Portfolio Insurance (CPPI) methods.
Using DACs, investors can benefit from 100% of the performance of the funds comprising the benchmark index.
Specifically, DACs have the following characteristics:
- Diversification. Within the scope of asset allocation strategies, these certificates benefit from the analysis of the companies and the diversification of investments for those specifically interested in including particular markets or sectors in their portfolios.
- Consolidation. By offering the possibility of early redemption (in the 3rd year), these certificates allow investors to consolidate the results achieved without waiting for the expiry date.
- The secondary market. Abaxbank commits to repurchasing the certificates. Nonetheless, there could be some liquidity risk.
- Financial risks. DACs are capital protected investment instruments: investors are aware of the maximum possible loss (a % of capital invested, e.g. 10%) which they may incur.
- Early redemption. If, on the 5th working day prior to the end of the year in which early redemption is provided (e.g., the 3rd year), the benchmark index is higher than a certain percentage of the capital invested (e.g. 130%) the DAC is understood to have expired and subject to early redemption, and the investors shall receive the early redemption amount as per the regulations.
- Early redemption amount as per regulations