Nasdaq Global Indexes and Exceed Investments have released a series of indexes based on structured products, offering U.S. investors defined outcomes, increased transparency and capital protection in a passive vehicle.
This groundbreaking series of indexes aims to provide the transparency of an index with the capital protection that comes with a structured product.
The Nasdaq Exceed Family of Structured Indexes (patent pending), was launched on September 23. Each of the three indexes in the series is based on structured products chosen by Exceed and provides a different level of capital protection and varying defined outcomes.
The Nasdaq Exceed Structured Protection Index (EXPROT) invests in portfolios with a maximum equity exposure of 12.5% and offers potential upside participation capped at roughly 15%. The Structured Hedged Index (EXHEDG) offers 10% protection against initial downward moves with geared 150% upside participation up to a maximum cap. The Structured Enhanced Index (EXENHA) offers no protection against declines but gives 200% geared upside subject to a maximum cap.
Each index is tied to an underlying portfolio of structured products based on the S&P 500 that is chosen and managed by Exceed in order to customize the index's risk profile by using a series of products with different potential return outcomes from a wide range of counterparties. The defined exposures are achieved by tracking a portfolio of structured investments comprising a rolling basket of investment grade fixed-income securities and cleared ”off-the-shelf” options.
By allowing exposure to a range of different products via an index, Exceed and Nasdaq aim to offer investors greater control over the outcomes and to mitigate counterparty risk by purchasing products from different issuers. This index-based strategy also seeks to resolve the issue of illiquidity inherent in structured notes, as an index is more readily tradable than a fixed-term note.
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