Equities
Stocks and Indices
Nigerian shares and the NGX 30, and the leading global indices such as the S&P 500, the FTSE 100 and the Nikkei 225.
What a Defined Outcome Is
A conventional investment passes the market's return to its holder, gains and losses alike, and the holder learns the result only when it arrives. A defined outcome works the other way round. The amount returned on a fixed date is set in advance as a function of a named market, so the holder knows before investing how much of the capital is designed to come back, how much of the market's movement is shared, and where that share stops.
That clarity is the point. Our research finds that investors who can see the shape of what they hold are better able to stay with it, and the return an investor keeps depends on staying.
What They Are Built From
Each defined outcome is assembled from products we already manage under registration with the Securities and Exchange Commission, Nigeria, the Naira Premium, Dollar Premium and Dividend Portfolios, combined with the market exposure the investor wants. The building blocks are familiar ones.
Fixed income
Bonds and Bills
Treasury bills and Nigerian government bonds in naira, and Nigerian government securities in dollars, which provide the floor beneath a payoff.
Foreign currency
Dollars and Naira
Outcomes defined in naira or in dollars, and outcomes that respond to the exchange rate between them.
Commodities
Oil and Gold
Brent crude and gold, the prices that matter most to Nigerian incomes and savings, through options listed on established exchanges abroad.
Nigeria has no listed options market, so a naira payoff cannot be bought; it is made, by holding shares and treasury bills and moving between them as the market moves. In dollars, the floor comes from government securities and deposits, and the share of the market from listed options.
Indicative Structures
Three illustrations of what can be built. They show what can be built. None is on offer, and none carries terms.
Illustration. Naira
Naira Highwater
Capital designed to come back in full, with a share of the rise in the NGX 30 measured at its highest quarter-end level, so a gain recorded at a quarter end is kept even if the market falls afterwards.
Illustration. US dollars
Oil Shock
Most of the capital designed to come back, with a payment that grows as Brent crude falls, up to a limit. Much of Nigeria's income moves with the price of oil, and this structure is built to pay when oil falls.
Illustration. US dollars
Global Leaders
Capital designed to come back in full, with a share of the rise in the S&P 500, the FTSE 100 and the Nikkei 225, each up to a cap.
Choosing a Shape
Every shape starts with the investor. FREBO, our behavioural profiling engine, reads how an investor responds to a loss, to a fall from a peak and to lagging others, and that profile chooses the family of payoff first. Only then are the terms within that family compared, by the return the investor is likely to keep. Expected return never chooses the family.
Before You Invest
- A defined outcome applies on its maturity date. Leaving earlier means taking the value on the day, which can be below the amount defined for maturity.
- A naira payoff made from shares and treasury bills depends on being able to trade as the market moves. A fall too fast to trade through, including successive limit-down days, can leave it short.
- A floor depends on the government, banks and exchanges behind it paying in full.
- Where a structure is designed to return less than all of the capital, part of the capital is at risk.
- A share of a market's rise, often up to a cap, can return less than the market itself when markets are strong.
- Capital returned in dollars is worth more or less in naira as the exchange rate moves.
Register Your Interest
Investors, advisers and institutions who would like to discuss a defined outcome, or be told when one is available, can write to us at welcome@oldshoreham.com.
The structures on this page are illustrations for discussion. They are not an offer or a recommendation, and any defined outcome is subject to its own documents and to an assessment of suitability.