S&P Fund Services rates CBA Capital Series Spectrum product as ‘Strong’
Standard & Poor’s Fund Services has assigned its ‘STRONG’ rating to the Commonwealth Bank’s (CBA)’s Capital Series Spectrum product, indicating it is an efficient and effective structure offering a value proposition for a clearly defined target market.
The Spectrum product comprises three separate equity-linked investment strategies that offer the potential of capital growth and, in the case of the first strategy, income as well. All three provide the safeguard of 100% capital protection at the end of the 5.5-year investment term.
S&P fund analyst Rodney Lay said: “Strategy 1 sits as a possible fixed-income alternative for suitable investors. In our view, the expected return (7.3% p.a., based on a Monte Carlo analysis undertaken by S&P) and the upside risk (40% of outcomes recorded the maximum return of 11.3% p.a.) make this a competitive offering relative to the comparable alternative, a five-year term deposit returning 6%”. The strategy is designed for investors seeking a fixed-income return but who are prepared to forgo a degree of fixed income in exchange for equity market upside risk.
“Strategy 2 will outperform domestic equities in negative to subdued growth environments. It is designed for investors who believe that the outlook is for a more subdued growth and/or a highly volatile market,” said Mr. Lay. Similar to Strategy 1 a high percentage of outcomes (40%) recorded the maximum possible return of 11.5% p.a., according to a Monte Carlo analysis undertaken by S&P.
Strategy 3 is suitable for those seeking exposure to international equities but with downside protection.
