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Currency Hedging

Intus Currency Hedging Service is intended for Euro investors who would like to benefit on the higher returns currently available for investment products in US Dollar (USD) and UK Pound Sterling (GBP) but not to take any currency risk. If you, as an Euro investor, would like to invest in USD Intus will cover for you the currency risk between the start and maturity date of the chosen investment product. In case the exchange rate of EUR would have fallen towards USD at the maturity date we will pay the currency loss to you. This includes also the coupons or dividends received during the investment term.

Typical investment products which offer good returns in USD and GBP but not in EUR are various Capital Protected Investment Products with 5-7 years investment term. These products are issued by major international banks with high credit ratings. Intus Brokers, our affiliate Group company, has a large selection of Capital Protected Products in their offering. You can find more details here.

EXAMPLE HOW THE CURRENCY HEDGING AGREEMENT WORKS:

100% Capital Protected Note, USD denominated

Issuer: A1 rated major European bank (Moody’s)

Performance linked to: Euro 70 index

Participation rate: 60% of index growth in 6 years term

Performance cap: 24% in 6 years term

Liquidity: daily liquidity at market price

Subscription fee: 0%

Amount to be invested: 10,000 EUR (11,750 USD)

Exchange rate at inception: 1 EUR = 1.175 USD

Currency Hedging fee: 1% for whole 6 years term (100 EUR/117.50 USD)

  1. Assumed performance 24% / Return from investment 14,452.50 USD (= 11,750.00 ./: 117.50 + 2,820.00)
  2. Assumed performance 12% /Return from investment 13,042.50 USD (= 11,750.00 ./: 117.50 + 1,410.00)

FOLLOWING IS AN EXAMPLE FOR TOTAL RETURN FOR EURO INVESTOR AFTER 6 YEARS WHEN  EUR/USD EXCHANGE RATE AT MATURITY IS

5% better than at inception (EUR has become stronger towards USD): 

  1. 12,300.00 EUR (3.83% per annum)
  2. 11,100.00 EUR (1.83% per annum)

5% better than at inception (USD has become stronger towards EUR): 

  1. 12,915.00 EUR (4.86% per annum)
  2. 11,655.00 EUR (2.76% per annum)

Worst case scenario: Index growth 0%, Intus will credit 1% currency hedging fee; no profit or loss

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