Commodity

Commodities Supercycle

Target

✔ hedge against inflation
✔ commodities prices benefit directly from rising inflation
✔ strategy with active commodity rebalancing, on global, holistic perspective
✔ strong upside expected due commodity price trend reversal

Descriptive

Over the last 6 years, commodities have been depreciating in value, not only in absolute prices, but also in comparison to equities (S&P 500). The growth of equities urged due to the low interest rate environment and expansive stimulus in monetary policy. Leading to an overall rise of the S&P 500 equities despite the pandemic lockdowns, due to the ask in technology companies. Five technology companies have become a dominant 20% stake in the S&P 500 index. The domination of the technology companies is negative for the equity index (S&P 500) in the environment of higher interest rates. As we expect the US federal reserve bank («FED») to increase the interest rates, companies dependent on external financing and companies sensitive to increase in prices will see a decline of the share price. The trend materialized in the 1st quarter of 2022 and following the graph below (Fig.2) there is more room to go.

Technical composition

Long: Commodities (First Trust Global Tactical Commodity Strategy Fund, Ticker: FTGC)
The FTGC commodity fund is an actively managed exchange-traded fund («ETF») that seeks to achieve attractive risk adjusted returns by investing in commodity futures contracts and exchange-traded commodity (ETC) linked instruments (collectively, the commodities instruments) through a full-owned subsidiary of the fund.

Short: S&P 500 (e-mini Futures)
The S&P 500, is a stock market index tracking the performance of 500 largest companies listed on stock exchanges in the United States.

The commodity instruments have an active component of rebalancing and constitute a well-diversified basket. The manager of the ETF (First Trust) seeks diversification and active management to put more weight on the most attractive commodities in terms of price and maturity. The composition is updated on a daily basis on the page of First Trust (to visit page, use this link)

Risk
High
Target return
50-100%
Issue date
03.02.2022
Strategy
Leveraged, Hedging
Lot (new issue)
150 000 USD
Lot (increase)
10 000 USD
Issuer
Leonteq
Currency
USD, EUR, CHF
Redemption
daily
Status
Open for new investors

Important! Profitability in the past does not guarantee profitability in the future. Targeted yield helps define investment objectives and is not a limit or guarantee for an investor

Last updated on 15 june 2022 . Daily update on the issuer's website.

Key Figures

Historical graph of Certificate price

Figures for the last monthSince launch
+11.72%+75.11%

Recent Transactions Examples

Instrument PnL Type of Transaction Currency Price Date
1st.Tranche Buy USD 35.16 03.02.2022
1/2 1st Tranche +58.26% Sell USD +55.64 14.03.2022
2nd Tranche Buy USD 48.97 23.03.2022
1/2 1st.Trance +54.38% Sell USD 54.28 05.05.2022
2nd Tranche +27.17% Sell USD 62.28 17.06.2022

Factsheet

Issue date
03.02.2022
Currency
USD
Issuer
Leonteq
Subscription Fee
3%
Redemption Fee
0%

Documents

Frequently asked questions

What is a Mini-Future and how does the leverage factor work?

A Mini-Future is a derivatives structured product, tracking performance of an underlying set of assets with the applied leverage effect. The leverage factor is identified at the launch of the product and changes accordingly to the price performance of the product. If the price of the product is indicated at $ 50, the product has a leverage factor of 2 (strike price always $ 100 /current price $ 50).

What is a Stop Loss?

In order to control the downside risks, the strategy has implemented a stop loss in the core attributes of the product itself. On an average loss of -50%, the stop-loss is triggered to limit the downside loss. In a stop-loss event, the product is to self-terminate and repay the investor the residual amount.

Why might I be asked to relaunch the strategy?

A strategy is advised to be relaunched in two cases. In case of a stop loss event or in case the price of the structured product reaches $ 100 (the target strike price). The strategy applies a leverage effect calculated as $ 100 divided by the market price. Once the market price is over $ 100, the product is advised to be relaunched as the positive effect of the leverage is to exceed the 1:1 level, and may have a less favorable effect going forward. Example: at a trading price of $ 150, the product would result in a leverage factor of 0.66. That implies that with every $ 1 move of the underlying, the strategy would benefit only by an increase of $ 0.66.

Liquidity and secondary market?

The product has a secondary market allowed to enter at any time if the size conditions are met. Secondary tranche is being sold at the agreed price based on the underlying performance and entry commission. The product has daily liquidity and can be liquidated at fair value at any time.

Why shall I use the product and not enter the pair directly?

The product is a leveraged strategy, including ETFs and Futures. It allows access to each or all strategies with any capital allocation. The strategy developer and sponsor, Grossmeister Capital, is also offering the support in the rebalancing of the strategies. It might be considerable to enter in several tranches, and considering the market condition and strategies development/s to realize profits if the market conditions may indicate a corrective phase.

What are the risks?

The product has the risk of negative performance, up to the extent of an automatic stop-loss event (approximately being triggered on a -50% performance). Further, there is the issuer risk with potential default of its operational service. Each structured product falls into the category of «high risk» products and is designed for qualified investors.

Contacts

To purchase an actively managed certificate Commodities Supercycle or to ask a question contact us by phone, e-mail, Instagram, Telegram or WhatsApp.