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Finexia
Long Gold -v- Short S&P 500
Investment Series 1

Structured Product Australia

This opportunity is available to wholesale and retail investors. Always consider the risk warning and your eligibility to invest.

Introduction

Finexia Securities is pleased to release a high conviction investment product designed to protect your wealth, in the face of unprecedented debt creation and global economic uncertainty.

Our view is that the Global economy and in particular, share markets, are ‘ripe’ for a correction. Historically high stock market valuations, combined with a massive increase in Central Bank debt levels have created a ‘perfect storm’ for rising inflation and runaway Bond yields.

With inflation starting to become a persistent problem, our case is that American debt is unsustainable and rising interest rates will be felt throughout the entire economy. This sea of stimulus should lead to an opportunity for investors.

The Finexia Long Gold-v-Short S&P 500 Investment Series 1 is a structured security designed to take advantage of a short-term (one-year) correction in the US sharemarket with the benefit of being exposed to gold price movements over the same duration.

This product is designed to be a 12-month exposure to a long Gold position via a call option over the SPDR Gold Trust, combined with a 12 month put option over the S&P 500 index. Investors should benefit from a rising Gold price and a simultaneous fall in the US sharemarket. Investors would only invest in the Finexia Long Gold -v- Short S&P 500 product if their view was consistent with the aforementioned scenario.

Click on the button above to download the Product Disclosure Statement (PDS).

Investment Overview

Finexia Long Gold Short S&P 500 Investment Series 1 (“Units“) is approximately a one year investment that aims to provide investors with the potential to benefit from an equally weighted exposure to a negative return of the S&P 500 Index (NYSE:SPX) (“S&P 500“) below -10% and a positive return of the SPDR Gold Shares ETF (NYSE:GLD) (“GLD“) above 10% (together, “Reference Asset”), and subject to changes in the USD/AUD exchange rate.

This means that for Investors to receive a Final Value at Maturity, the Closing Price of S&P 500 must have fallen by greater than 10% between the Commencement Date and the Maturity Date and/or the Closing Price of GLD must have risen by greater than 10% between the Commencement Date and the Maturity Date. If neither of these conditions are met, Investors will not receive a Final Value and will lose their entire Investment Amount. The Final Value will increase as the performance of S&P 500 continues to fall below -10% and/or the performance of GLD continues to rise above 10%.

This payoff structure is intended to approximate an options strategy consisting of a long 90% strike put option on S&P 500 and a long 110% strike call option on GLD. See the Product Disclosure Statement (PDS) for the effect of changes in the Closing Price of the components of the Reference Asset on the Final Value.

The Units provide investors with the right to purchase ordinary shares in a leading Australian company, Telstra Corporation, on a deferred basis.

Other features include:

  • potential for enhanced exposure to the Reference Asset (because the Issue Price is a fraction of the Notional Exposure); and
  • potential for returns at Maturity which are determined by reference to the Reference Asset over the Investment Term.

The Final Value is subject to foreign exchange risk and movements in the AUD/USD exchange rate will affect the amount of the Final Value (if any)1.

Each Unit is a separate right to receive the Delivery Assets and certain related rights under a deferred purchase agreement as described in this PDS.

After Maturity, Investors will receive the Delivery Assets, unless they request for the Issuer to sell the Delivery Assets on their behalf and receive the Sale Monies (which includes a deduction for any Delivery Costs).

1 If the AUD/USD exchange rate increases, the Final Value per Unit payable (if any) will decrease. If the AUD/USD exchange rate decreases, the Final Value per Unit payable (if any) will increase.

Why Invest?

Finexia Long Gold Short S&P 500 Investment Series 1 (“Units”) offer the following investment features:

Exposure to Reference Asset

The Units provide investors with exposure to the Reference Asset, being an equally weighted exposure to the negative performance below -10% of the S&P 500 Index (NYSE:SPX) and the positive performance above 10% of the SPDR Gold Shares ETF (NYSE:GLD). Please refer to Section 4.3 of the PDS for more information on the Reference Asset.

The Issue Price for Units is $0.14 which provides a Notional Exposure of $1.00 per Unit. The Notional Exposure per Unit is the amount of each Unit’s exposure to the Reference Asset at the Commencement Date.

The Notional Exposure is obtained by way of a single upfront payment of the Total Investment Amount by Investors. However, Investors may lose their Total Investment Amount. Please refer to Key Risks in Section 3 “Product Summary” and “Loss of Total Investment Amount” in Section 8 “Risks” in the PDS for further information.

Currency Exposure

Units provide Investors with exposure to the movements of the AUD/USD exchange rate during the Investment Term. Any payments which Investors receive (being the Final Value), and therefore any investment gains, are subject to the fluctuations in the AUD/USD exchange rate. For further information, please refer to Section 4.1 and Section 8 “Risks” in the PDS.

Acquire Delivery Assets at Maturity

At Maturity, the Issuer will deliver the Delivery Assets to you (unless you have elected to use the Agency Sale Option in which case the Delivery Parcel will be delivered to a nominee of the Issuer and sold on your behalf). The value of the Delivery Parcel you receive will be determined by reference to the Final Value per Unit. The Final Value per Unit depends on the decrease (if any) in the Reference Asset Value below the Initial Reference Asset Value over the Investment Term.

For further information, refer to Section 4.1 “Final Value at Maturity”, Section 4.4 “The Delivery Assets”, Section 6 “Maturity and Early Maturity” and “Delivery Assets” in Section 8 “Risks” in the PDS.

Payment of the Final Value relies on the Issuer meeting its obligations and the Hedge Counterparty’s ability to meet their obligations under the Hedge. The obligations are unsecured obligations of the Issuer and unsecured obligations of the Hedge Counterparty. A relevant factor for the assessment of counterparty risk is the financial strength of the Issuer and Hedge Counterparty. You should refer to “Counterparty risk of the Issuer and Hedge Counterparty” in Section 8 “Risks”. If the Hedge Counterparty goes insolvent, the Issuer’s obligations to pay the Final Value will be dependent on any amounts it receives from the Hedge Counterparty under the Hedge for the Series and you may receive nothing.

Potential Benefits

The Units have been designed for Investors who:

  1. have a view that the S&P 500 Index (NYSE:SPX) will decrease by greater than 10% over the Investment Term and the SPDR Gold Shares ETF (NYSE:GLD) will increase by greater than 10% over the Investment Term and the US dollar (“USD”) will appreciate against the Australian dollar (“AUD”) during the Investment Term.
  2. are seeking an investment that provides notional leverage because the Notional Exposure exceeds the Issue Price. Notional leverage magnifies both gains and losses on the Reference Assets.
  3. are not relying on the Units to produce income during the Investment Term.
  4. want an investment where the losses are limited to the Issue Price of the Units.
  5. are seeking an easy-to-access, one year investment.
  6. are seeking an easy way to gain exposure to overseas assets with exposure to AUD/USD currency movements.
  7. after Maturity, would like to receive shares in a leading Australian company.
  8. may be looking for an investment for their self managed superannuation fund.
  9. understand and can tolerate the risk associated with notional leverage and how it can impact an investment in the Units both in positive and negative market conditions (that is, by enhancing potential gains but also magnifying potential losses).
  10. understand and can tolerate the risk that there is no guarantee of financial return on their investment. Investors may lose all or part of their Total Investment Amount. There is no minimum Final Value.

Why the Units may not be Suitable

An investment in the Units would not be a suitable investment for Investors who:

  1. do not have a negative view of the S&P 500 Index (NYSE:SPX) over the next year and in particular believe that the S&P 500 Index (NYSE:SPX) will not decrease by greater than 10% between the Commencement Date and the Maturity Date.
  2. do not have a positive view of the SPDR Gold Shares ETF (NYSE:GLD) over the next year and in particular believe that the SPDR Gold Shares ETF (NYSE:GLD) will not increase by greater than 10% between the Commencement Date and the Maturity Date.
  3. are unwilling to pay the Total Investment Amount upfront.
  4. are unwilling to take the risk that the performance of the Units will be insufficient to recover the Total Investment Amount and the risk of the loss of all of their Total Investment Amount.
  5. are unwilling to bear foreign exchange risk with respect to the return on the Units. In particular, do not have a view that the USD will appreciate against the AUD over the Investment Term2.
  6. are unwilling to bear the counterparty credit risk to the Issuer and Hedge Counterparty in relation to the payment of the Final Value.
  7. are unwilling to pay the Adviser Fee (if any).
  8. do not expect to hold the Units until the Maturity Date.

This list is not comprehensive and does not take into account a potential Investor’s personal needs and circumstances. Investors should consider the appropriateness of the above statements having regard to their own objectives, financial situation and needs.

Before investing you should consider carefully the risks that relate to an investment in the Units. Please refer to Section 8 “Risks” in the PDS.

2 If the USD depreciates against the AUD (i.e. the AUD/USD exchange rate increases) during the Investment Term this decreases any Coupons payable and the Final Value.

Risk Warning

This investment carries risk. Before investing, potential investors should read this entire PDS to make sure they fully understand the risks of investing in the Units and having exposure to the Reference Asset, and speak to their financial, legal and tax advisors. This document does not take into account a potential investor’s own objectives, financial situation or needs.

Investors should seek professional advice which considers their individual objectives, financial situation and needs before making any investment decision.

Issuers

Issued by Strategic Investment Portfolios Pty Ltd (ACN 632 644 609) and arranged by Finexia Securities Limited (ABN 61 608 667 778, AFSL 485760).

The Fine Print

With all information that we present, Finexia need to make you aware of the fine print associated with this page. Please take the time to read our Website Disclaimer and Investment Risk Notice.

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Finexia Securities Limited is the holder of AFSL No. 485760 and a subsidiary of Finexia Financial Group (ASX:FNX).


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