Basket Equity Linked Deposit
A basket equity linked deposit is another structured investment product that combines derivatives. The income interest is directly linked to the average performance of the stock basket of a company. The investor has the opportunity to choose the currency for the deposit. Basket Equity Linked Deposits are not the same as traditional time deposits and the capital is not protected. There is an element of market risk involved.
Similar to other deposits, the capital cannot be withdrawn prior to maturity. The market value of Basket Equity Linked Deposits may fluctuate and the potential payout at maturity is dependent on the performance of the linked stocks in the stock basket during the investment period. If the linked basket performs positively then the investor gains, however if it does not perform positively, then the investor is unlikely to receive an interest. In some extreme cases, the investor may run the risk of a total loss of his capital invested. Investors must assess the risk factors, before investing in this type of product.