Why investors should examine redemption penalties carefully

While investors should see capital protected products as a long-term undertaking similar to any other equity investment, they should look carefully at redemption penalties because these can vary quite dramatically

The fundamental objectives of capital-protected products are the provision of capital protection and risk-controlled growth, which suit the investment profile of cautious investors. And their diversification benefits should appeal to investors across a range of risk profiles. The wide variety of products available, offered by providers ranging from small boutiques to large investment houses, means that a range of potential outcomes is also available. The outcome of each individual product is dependent on the product's design and the behaviour of the underlying market during the product's ...