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PrintAug 14, 2007
JPMorgan today announced the launch of an innovative series of structured investments that offer retail investors access to three global investment themes: alternative energy companies, emerging economies, and global equities – with the added benefit of principal protection when held until maturity.
The Global Thematic Strategic Asset Securities (STRATAS) are principal protected deferred purchase agreements providing a menu of three investment options. The three themes include:
- Future Energy STRATAS - exposure to the performance of companies in the DAXglobal® Alternative Energy Index, which tracks the performance of 15 of the world’s largest companies within the alternative energy sector;
- Future 11 STRATAS - exposure to the performance of companies in the DAXglobal® Emerging 11 Index, which tracks the performance of companies from up to 11 emerging and frontier economies; and
- Global Vantage STRATAS - exposure to three of the world’s major equity indices - the S&P500, DJ Stoxx 50 and Nikkei 225, with the benefit of a retrospective allocation.
“The launch of the Global Thematic STRATAS offers access to global investments that can be difficult for Australian retail investors to reach directly,” said Mr David Jones-Prichard, Vice President, Equity Derivatives and Structured Products with JPMorgan. The underlying assets have experienced impressive performance over the past three years relative to their benchmarks, with the DAXglobal® Alternative Energy Index up 330 per cent in three years to July 2007, and the DAXglobal® Emerging 11 Index up 140 per cent for the same period.
“These securities provide principal protection at maturity and offer the investor a choice of either 90 per cent or 100 per cent principal protection,” Mr Jones-Prichard said. “In addition, there is no direct currency risk which means returns are not directly affected by movements in the Australian dollar. The floored averaging smooths volatility and helps manage the downside risk.” JPMorgan Australia.
Global Thematic STRATAS is the latest in a new series of structured investments to be introduced to Australian retail investors by one of the world’s leading investment banks and structured investment providers, JPMorgan.
“We have worked closely with advisers to determine exactly what investors are looking for in a structured investment and have developed Global Thematic STRATAS accordingly.
“This offering is tailored to retail and SMSF Trustee investors seeking diversification across global investments that are normally difficult for Australian retail investors to reach, with high yield potential, the security of principal protection, and the potential for annual coupons. STRATAS also remove the need to select the optimal portfolio from the outset,” Mr Jones-Prichard said. Global Thematic STRATAS has received a Recommended rating from independent equities research firm, Aegis, and will be available through financial advisers and brokers.
Mr Damian Roche, Head of Equities for JPMorgan in Australia said: “After the launch of Alternative Energy STRATAS and Masters STRATAS earlier this year, Global Thematic STRATAS is another example of JPMorgan delivering global market access to Australian investors. The firm is able to leverage its global structured product expertise to bring a broad range of innovative investment strategies to markets such as Australia.”
For further information, please visit www.jpmorgansp.com.au or contact:
JPMorgan Australia
David Jones-Prichard
Vice President, Equity Derivatives & Structured Products
02 9220 1633
david.jones-prichard@jpmorgan.com
BlueChip Communication
Bruce Madden
02 9018 8603 or 0412 372 543
bruce@bluechipcommunication.com.au
Notes to editors
About JPMorgan
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of US$1.4 trillion and operations in more than 50 countries. The firm is a leader in investment banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management, and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase serves millions of consumers in the United States and many of the world’s most prominent corporate, institutional and government clients under its JPMorgan and Chase brands. Information about the firm is available at www.jpmorganchase.com.
About Structured Investments
Structured investments provide a versatile set of tools for investors looking to combine some of the best features of equity and fixed income. These investments can combine downside protection, growth and income. Performance can be based on the performance of a range of asset classes such as equity indices, global property and commodities.
The risk and return profiles of structured investments can provide additional diversification to an investor’s portfolio, enabling that investor to gain exposure to a select type of asset or group of assets, with the potential to reduce their overall portfolio risk.
A key feature of many structured investments is that they are principal protected, which may be appropriate for investors looking for growth opportunities but wanting the additional security of reduced risk to their principal investment. Maturities generally range from three to seven years, and clients should intend to hold the investments to maturity.
About the DAXglobal® Emerging 11 Index The DAXglobal® Emerging 11 Index is a benchmark index newly created by the Deutsche Börse. The Emerging 11 tracks the performance of companies from up to eleven emerging and frontier countries.
This index comprises 40 of the largest and most liquid stocks from the countries within the index. At the time of the PDS, those countries were Indonesia, Mexico, Pakistan, Philippines, South Korea, Turkey and Vietnam. Shares of companies in the remaining four countries Bangladesh, Egypt, Iran and Nigeria are currently not considered “investable” and are therefore not included in the index at present.
The level of a country’s gross domestic product determines how many of its stocks are included in the index. Weighting depends on market capitalisation and daily trading volume. The maximum weight for each country is 25 per cent (at the annual review date); the company cap is at 10 per cent (at the quarterly review date).
About the DAXglobal® Alternative Energy Index
Alternative energy is energy from sources which may replace traditional fuels, such as oil and coal. Globally, these traditional energy sources are experiencing increased demand and depleted supply at the same time. The need for more sustainable energy sources, and increasing environmental awareness, has driven growth in the development of the alternative energy sector.
Launched in August 2006, the DAXglobal® Alternative Energy Index tracks the performance of 15 of the largest alternative energy enterprises worldwide.
These companies generate more than 50 per cent of their revenues in one of five alternative energy sub-sectors - natural gas, wind, solar, ethanol and geothermal/hydro/battery power.
The index has shown low correlation with more broadly diversified global equity market indices, while potentially providing Australian investors with geographic diversification across Europe, the Americas and Asia.
About the index optimisation (Global Vantage STRATAS)
At each annual observation date, Global Vantage STRATAS observes the return of each of the indices relative to the issue date and allocates a 75 per cent weighting to the best performing of the three indices and 25 per cent to the second best performing.
The DJ Stoxx 50 Index is a blue-chip representation of leaders in Europe and covers Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK. The index captures approximately 50 per cent of the free float market capitalisation of the Dow Jones Stoxx Total Market Index, which in turn covers approximately 95 per cent of the free float market capitalisation of the represented countries.
The Nikkei 225 Stock Average Index is Japan’s most widely watched index of stock market activity and has been calculated continuously since September 7, 1950. The 225 components of the Nikkei Stock Average are among the most actively traded companies on the first section of the Tokyo Stock Exchange.
The S&P 500 is widely regarded as one of the best single gauges of the U.S. equities market. This world-renowned index includes 500 leading companies in leading industries of the U.S. economy. Although the S&P 500 focuses on the large cap segment of the market, with over 80 per cent coverage of U.S. equities it is also an ideal proxy for the total market. The S&P 500 is part of a series of S&P U.S. Indices that can be used as building blocks for portfolio construction.