When I was recently asked to look at the Zurich Jade deposit account, I immediately rejected it out of hand as a “Structured Product.”
But we have spent a great deal of time understanding what the product is, what it can do, where the risks lie and whether it was something we would feel comfortable recommending to clients in the right circumstances.
I’m grateful to Tony Davies and Ian Black of Zurich for taking time to go through the product in detail and make us comfortable with it.
In essence, it’s a deposit account, held in real cash with an interest rate linked to a basket of stocks. If all the individual shares are up in any way a year after the strike date, you receive the full declared coupon (currently 6% or 8%, depending on term) and if some are up and some are down, a calculation is done to lower the rate.
The minimum return you could receive in a year is 0% – thus you will definitely receive at least the whole of your capital back at the end of the term, 3 or 4 & 1/2 years.
Given the current low rates of interest, using a portion of your longer term capital to try and improve returns makes sense. In particular, companies sitting with large cash deposits should consider this carefully.
I also like Zurich’s approach to protecting the risks associated with the derivatives involved by insisting that the issuer deposit cash with Zurich equivalent to level of exposure!
Belt and braces from the cautious Swiss.
It’s not for everyone as the starting point for access to it is £100,000 and if you can commit £1m, then you can create your own bespoke account.
In summary, if you want a bank account that could pay you substantially more interest than you currently receive and are prepared to tie up your capital for a period of time and are comfortable with the low risk and capital back guarantee, then contact us today for an application pack and more information.
Roland Oliver