Going global

Tuesday, 1 May, 2001 - 22:00
A NEW investment product from Societe Generale illustrates the diversity of the warrants market.

SG CaPELS are promoted as the first stock market investment guaranteed not to lose principal.

Individuals who buy SG CaPELS are effectively investing in 10 major global companies, including Vodafone, Nokia, American Express, AOL Time Warner, Sun Microsystems, Sony, Honda and Philips.

Investors will be protected against exchange rate fluctuations and, when the SG CaPELS mature in five years, they are guaranteed to recover their full investment.

The “price” of this capital guarantee is that annual capital growth is limited to 20 per cent. For instance, if the share portfolio gains by 30 per cent, the value of the SG CaPELS grows by just 20 per cent.

On a best case scenario, with 20 per cent growth every year, a $1000 investment would return $2488 in five years.

Like all warrants, SG CaPELS will be listed on the ASX and can be bought and sold like normal shares.

Another feature of the CaPELS is that there are no annual management fees.