The National Bank of Abu Dhabi (NBAD) has launched a 100 per cent capital-protected commodity basket investment.

The investment is a highly innovative product that allows investment in five commodities and offers investors the potential for attractive returns, a statement said.

The five-in-one commodity basket investment offers investors the opportunity to capture upside in the commodity markets without exposing themselves to downside risk if held to maturity, the bank said.

The new product, developed by NBAD’s Asset Management Group (AMG), matures in three years and offers investors returns linked to the price of five commodities: oil, gold, copper, corn and sugar.

The investors’ capital is guaranteed by NBAD against any losses from falls in the value of the commodity basket, it said.

This product enables investors to diversify their investments into commodities without physically having to buy thus freeing them of the burden and potential costs of keeping the commodities in their possession, it said.

At a time when investors are cautious about equity markets and real estate, the launch of a capital-protected commodity basket investment meets a vital and critical need in the market as investors’ appetite for commodities has increased steadily, the statement said.
 
“We believe that investors should be given the opportunity to invest in commodities as part of a diversified portfolio. We have listened to our clients’ needs and are now offering a product that not only protects capital but also allows upside participation, all wrapped in a simple mechanism that avoids the need for complex physical commodity delivery and storage costs,” said Mark Watts, head of fixed income and responsible for structured products at AMG, NBAD.

“Many investors today are faced with low returns on cash deposits, which with rising prices translates into negative return on cash. The new product diversifies portfolios and targets investors who want the potential to enjoy higher returns with 100 percent downside protection,” Alan Durrant, the group chief investment officer of NBAD and general manager of AMG.

The NBAD investment will be available to institutional and personal investors beginning September 18 and will be offered for four weeks only, with generous incentives for early subscribers.

The minimum investment size is Dh100, 000 ($27, 230). The expected return is capped at 24 percent.

NBAD's Asset Management Group is one of largest asset managers in the region with more than Dh5 billion under its management including equities, fixed income and Sukuk. – TradeArabia News Service