Merchant Capital has set up a structured product that offers exposure to emerging markets Brazil and China.
The three-year product will provide a 7 per cent growth payment twice a year if both the underlying markets are 5 per cent or more above their initial levels at the payment points.
The product will be based on the iShares MCSI Brazil index fund and the Hang Seng China enterprises index. The company says there is a possibility of early maturity in some circumstances.
Merchant Capital says there could be 42 per cent of growth after the three-year term, subject to counterparty risk. The securities are issued by Barclays Bank, which has a Standard & Poor’s AA-rating.
But the return of investors’ initial capital is not guaranteed. If either index is more than 50 per cent down on its initial level at maturity, they can lose some or all of their savings.
The product will be available for direct investment, closing on October 7, but not through Isas, and has a £5,000 minimum investment.
Director of structured products John Gracey says: “It offers investors significant upside driven by two of the most important Bric emerging markets, Brazil and China.”