Structured product in life insurance: a response to volatility

There are days with and days without. On the stock markets, the beginning of 2022 was rather marked by “free” days, and above all by significant volatility which does not facilitate the task of investors seeking to capture stock market returns over the long term. However, there is still room for opportunistic investments aimed at high returns. This is also the whole point of our next structured product.

The advantages of a structured product in a tight market

Regular readers of Marc Fiorentino’s newsletter (and our daily stock market newsletter) were able to learn about the stock market performance of the 1st quarter. Unsurprisingly, the main indices ended the first 3 months of the year in the red. Jumbled up, this underperformance can be explained by geopolitical tensions, exacerbated by the Ukrainian conflict, soaring inflation in Europe and the United States, particularly affecting raw materials, or even the tightening of Western monetary policies, and especially that of the US Federal Reserve.

Summary of races between January 1 and March 31, 2022:

  • 5% drop on the Dow Jones and the S&P.
  • around 10% on the Nasdaq.
  • 7% on the CAC 40.
  • 9% on the Eurostoxx 50.

Under these conditions, resorting to a stock market investment through a structured product is all the more relevant. In effect, the return of a structured product, in particular in a traditional autocall formula (with early redemption), is not directly dependent on stock market volatility. Thus, even in the event of a decline over a period of several months, the final yield of the product is not necessarily undermined: it is the performance at maturity (after 6 to 12 years depending on the maximum term, or less in the event of early redemption) that will be the judge of the peace.

In addition, a structured product allows the investor to benefit from a more controlled return/risk ratio. The performance is capped (10% per year for example) compared to a traditional share purchase but it is also more protected : according to the formulas, it is even possible to gain, even when the underlying stock market (most often an index) ends up lower than its initial level. Furthermore, most structured products provide capital protection mechanisms, in order to avoid a loss provided that the fall in the underlying does not exceed a given threshold (-50% for example). It should also be noted that all the performance and capital protection parameters are known in advance by the investor.

Our future structured product will be available in the life insurance contract Meilleurtaux Liberté Vie

A dynamic product with a high profit target

For several years now, Meilleurtaux Placement has been developing structured products accessible to all as part of our life insurance policies (and retirement savings plans). Lately, from many savers, and in particular defensive and balanced profiles, have subscribed to our M Yield 7 offer, which offered the distribution of a coupon of 4% per year with capital and performance protection of up to 50% downside. A resolutely defensive formula, dedicated to those seeking a higher return than funds in euros while limiting risk-taking.

To complete our offer, the teams at Meilleurtaux Placement have designed a product based on a more dynamic formula.. That is to say, a mechanism with a higher return and, in return, a more significant risk taking. As it happens, the profit target is set at 10%* per year until the unwinding of the product, at maturity or in advance when the required conditions are met. A capital protection net at maturity is provided, as well as an “airbag” to generate performance even in the event of a drop in the index, knowing that these two mechanisms will not be set at the same level. .

Our future structured product will be available in the PER Meilleurtaux Liberté PER

The advantageous framework of life insurance for investing

To allow you to invest in the best conditions, this next structured product will be available in our range of life insurance contracts. This allows investors to benefit from excellent conditions for investing their savings:

  • No remittance fees ;
  • An investment accessible from €1,000 or less (variable amount depending on the contract);
  • Reduced management fees under the contract : in the best-rate Placement life insurance policies currently available for subscription, they do not exceed 0.6% on the Units of Account.

Added to this are the advantages specific to the life insurance envelope, and in particular its attractive taxation, in particular for contracts over 8 years old. These allow you to benefit from an annual allowance of €4,600 for a single person or €9,200 for a couple subject to joint taxation on the share of interest contained in redemptions (the capital being systematically exempt from tax).

Note that our next structured product will also be available in a selection of our Retirement Savings Plans.

Contact a Meilleurtaux Placement advisor

Non-contractual communication of an advertising nature

Warning :

This article does not constitute personalized advice. Before any investment, a preliminary meeting with an adviser is essential in order to check that the contract or the support presented are adapted to your financial situation, your objectives and your investor profile. Investing in units of account, the value of which the insurer does not guarantee but only commits to in terms of number, presents a risk of capital loss. Past performance is not indicative of future performance and depends in particular on the evolution of the financial markets.

Structured products present a risk of capital loss and must be considered over an investment period that may run until their maturity. Consequently, they are not suitable for investors wishing to exit before the maturity of the product or who are over 70 years old. Meilleurtaux Placement recommends that any subscriber interested in investing in a structured product contact their adviser in order to be accompanied in the assessment of its appropriateness, and this in particular with regard to the risks inherent in the support incurred, detailed in its legal documentation and available on our website or from our advisers.

Risk factors include:

– Credit risk: investors take a final credit risk on BNP Paribas SA as guarantor of the issuer. Consequently, the insolvency of the guarantor may lead to the total or partial loss of the amount invested.

– Market risk: the product may experience significant price fluctuations at any time (due in particular to changes in the price, the underlying instrument(s) and interest rates ), which may in some cases lead to the total loss of the amount invested.

– Liquidity risk: this product involves a materially relevant liquidity risk. Certain exceptional market circumstances may have a negative effect on the liquidity of the product. The investor may not be able to sell the product easily or may have to sell it at a price that significantly impacts the amount he earns. This may result in a partial or total loss of the amount invested.

– Risk of capital loss: the product presents a risk of capital loss. The redemption value of the product may be less than the original investment amount. In the worst case scenario, investors can lose up to their entire investment.

– Risk related to the possible default of the Issuer/Guarantor: in accordance with the regulations relating to the bail-in mechanism of financial institutions (bailin), in the event of probable or certain default of the Issuer/Guarantor, the investor is subject to the risk of a decrease in the value of its debt, of conversion of its debt securities into other types of financial securities (including shares) and of modification (including potentially extension) of the maturity of its debt securities.

* Gain objectives – Costs:

The objectives presented do not include tax and social security deductions and management fees applicable to the contracts concerned, subject to retention of the medium until the date of reimbursement and in the absence of bankruptcy or default of payment by the issuer and / or the guarantor.

An early exit from the support (following redemption, arbitration or premature death of the insured) will take place at a price depending on the evolution of market parameters at the time of the exit (level of the index, interest rate, volatility, credit risk premiums) and may therefore lead to a risk on the capital, which cannot be measured a priori).

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