Yield enhancement products

Probably the best known UBS Investment Products for yield enhancement are UBS Kick-In GOALs, UBS BLOCs and UBS Express Certificates. They are usually ideal for investors with a moderate to high risk tolerance who wish to get more out of their investment portfolio during markets that are tending sideways. The possible universe of underlying assets includes indices, equities, currency pairs and commodities.

Many Investment Products aimed at optimizing yields offer partial protection. This can provide attractive returns even when the price of the respective underlying asset just remains stationary up to maturity. Since the capital protection is often conditional (e.g. in the form of a barrier) or is only partially provided (e.g. in the form of a price reduction), loss of invested capital may nonetheless occur on maturity. In addition, the opportunity for yield that is expected is often limited to a maximum return.

In addition, the issuer risk must be taken into consideration with all UBS Investment Products, since the capital invested could be lost if UBS AG becomes insolvent – irrespective of the performance of the underlying asset.



Overview

Discount Certificate (1200)

Barrier Discount Certificate (1210)

Reverse Convertible (1220)

Barrier Reverse Convertible (1230)

Express Certificate (1260)
 


 

UBS BLOC (Buy LOw or Cash)

SVSP: Discount Certificate (1200)

Payoff diagramm UBS BLOC (Discount Zertifikat)

Participating in price increases is limited: as soon as the price of the underlying asset trades at or above the cap level at maturity, the UBS BLOC will yield the anticipated return. The price reduction granted at the beginning results in investors benefiting from a safety buffer. Buyers of a UBS BLOC are almost always in a better position when the prices of the underlying asset fall than direct investors are, as they usually suffer fewer losses in terms of percentage.

However, the reduction in price is not full protection at maturity. If the underlying asset trades below the purchase price paid for the certificate there will be a loss in the capital invested. If the underlying asset closes below the cap level at maturity, the repayment is linked directly to the price of the underlying asset. The investor is then either paid the value of the underlying asset or the cash value of the underlying asset adjusted by the subscription ratio.

You can find a more detailed product description of UBS BLOCs in our brochure.

To the top


 

UBS BLOC Plus

SVSP: Barrier Discount Certificate (1210)

Payoff diagramm UBS BLOC Plus (Barrier Discount Zertifikat)

UBS BLOCs Plus, also known as a Barrier Discount Certificates, make it possible for investors with a moderate-to-high risk tolerance to obtain a price reduction when purchasing a selected underlying asset (e.g. index, equity, currency pair or precious metal). The more favorable entry results in a return benefit, so that attractive returns are possible even in a sideways moving market.

In addition, UBS BLOC Plus features conditional capital protection that aims to protect the underlying asset from moderate price declines. As long as the underlying asset does not reach or fall below a pre-defined barrier (kick-out level) during the term of the investment, investors are paid out at maturity a set maximum amount defined by the cap level.

If the barrier is breached during the term of the investment, the conditional capital protection falls away and investors are, as in the conventional UBS BLOC and depending on the current price of the underlying asset, paid either the value of the underlying asset (or the cash value of the underlying asset adjusted by the subscription ratio) or, if the price of the underlying asset again exceeds the cap, the previously set maximum amount. As soon as the underlying asset trades below the purchase price of the Certificate there will be a loss of the capital invested.

You can find a more detailed product description of UBS BLOCs in our brochure.

To the top


 

UBS GOAL

SVSP: Reverse Convertible (1220)

Payoff Diagramm UBS GOAL (Reverse Convertible)

With UBS GOALs, also known as Reverse Convertibles, investors with a moderate-to-high risk tolerance in sideways moving markets can optimize their opportunities to earn yields thanks to a coupon. While the coupon is always paid out, the type and amount of the repayment of the nominal amount on expiration is aligned to the price of the underlying asset (e.g. individual equity, share index, equity basket, currency pair or commodity).

At maturity, investors receive a cash payment of the invested capital (nominal) in full if the price of the underlying asset falls above the pre-defined base price (strike). If the price of the underlying asset falls below that price, however, investors receive either an equity delivery of the underlying asset or the then-applicable value of the underlying asset in cash (adjusted by the respective subscription ratio) at maturity, depending on the structure of the product.

A potential loss is cushioned by the coupons compared to direct investments, as investors are due interest payments on these irrespective of the performance of the underlying asset. If the price of the underlying asset declines, the capital invested may be lost despite the coupon.

You can find a more detailed product description of UBS GOALs in our brochure.

To the top


 

UBS Kick-In GOAL

SVSP: Barrier Reverse Convertible (1230)

Payoff diagramm UBS Kick-In GOAL (Barrier Reverse Convertible)

With UBS Kick-In GOALs, also known as Barrier Reverse Convertibles, investors with a moderate-to-high risk tolerance in sideways moving markets can optimize their opportunities to earn yields thanks to a coupon. As in the classic UBS GOAL (“Money or Equity Delivery”), the coupon is always paid out. The type and amount of the repayment of the nominal amount on expiry is aligned to the price of the underlying asset (e.g. individual equity, share index, equity basket, currency pair or commodity).

In contrast to the classic UBS GOAL, the UBS Kick-In GOAL also offers a safety buffer that aims to provide protection from moderately falling prices of the underlying asset. If the underlying asset does not breach a pre-defined barrier (kick-in level) during the term of the investment, investors are repaid the nominal amount in full at maturity. If the barrier is breached during the term of the investment, the Kick-In GOAL has the nature of a conventional GOAL.

In this case, the repayment at maturity is aligned to the price level of the underlying asset. If the underlying asset closes above the pre-defined base price (strike) on maturity, the repayment is also the full nominal amount. If the price of the underlying asset, however, closes at or below the strike price, the repayment will, depending on the structure of the product, either be a pre-determined number of units of the underlying asset (equity delivery) or a cash payment of the then current value of the underlying asset (adjusted by the respective subscription ratio). If there are heavy price declines, the invested capital may be lost despite the coupon.

You can find a more detailed product description of UBS GOALs in our brochure.

To the top


 

UBS Express Certificate

SVSP: Express Certificate (1260)

Payoff diagramm UBS Express Zertifikat (Express Zertifikat)

UBS Express Certificates aims for early repayment before the end of the normal maturity. In order to fulfil this goal, the price of the underlying asset on one of the regular observation dates has to be at or above the Early Redemption Level. The exact product structure can, however, differ markedly from product to product. For instance, it is possible that the Early Redemption Level increases or decreases from one observation date to the other. It is also possible that, if early repayment is not made, a coupon is paid out on the respective valuation days – similarly to a "consolation prize".

If all the observation dates with the opportunity of early redemption go by without being used, the Express Certificate will be redeemed at the end of the regular maturity. The final redemption amount, again, depends then on the individual product structure. Many UBS Express Certificates for example have an additional Kick-In barrier: As long as the price of the underlying asset reaches or falls never during the lifespan of the product below the pre-defined Kick-In barrier, investors can at least expect the repayment of full nominal amount. Due to the large range of possible variations of UBS Express Certificates it is important to gather detailed information about the individual product structure before a possible purchase of a UBS Express Certificate.

To the top