The product is designed for investors who are looking for returns in either falling or rising markets, which could be attractive to investors in an uncertain economic climate. Unlike conventional structured products twin win is traded on the London Stock Exchange like an ETF. Investors can buy it at any time on the secondary market until it matures on November 2, 2012.
Twin win works by setting an initial level for the FTSE 100 index of 5,150 points. If the index rises beyond this level at the end of the term, investors will receive 100 per cent of this growth along with their original capital. If the index falls by up to 36 per cent, never closing at or below 3,300 points on any day during the term, investors receive a return equivalent to 100 per cent of the fall in the index plus their original capital. Societe Generale calls this turning a fall into a positive return the ‘twin win’ effect.
However, if the index falls below 3,300 points, or 64 per cent of its initial value, at any time during the term, the twin win effect expires. Investors can still benefit from 100 per cent of the growth in the index if the index finishes higher at the end of the term, but any falls are no longer translated into a positive return and the capital return at maturity will be reduced by the same amount as the fall in the index.
As a hybrid of a structured product and an ETF, the twin win product is innovative, but it could also be too complicated for some investors. It may appeal to sophisticated investors who are looking for a bull and bear strategy with liquidity and transparency.