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Multi Barrier Reverse Convertible on Energy Stocks

We share Julius Baer Research’s bullish view and overweight recommendation on the energy sector, primarily on valuation grounds. Based on normalised earnings, it is the only pure value case left in the equity market. In addition, energy stocks offer market-leading cash flow generation as well as the most attractive dividend yields and solid earnings growth.

In the current macro environment, which is characterised by low but slightly rising inflation, energy stocks provide major diversification benefits. They also act a possible hedge against political risk, which seems to be structurally rising. Moreover, record-low relative valuation levels provide high re-rating potential.

Capitalising on this, we have placed a Multi Barrier Reverse Convertible in subscription, comprising of three major oil & gas companies that deliver high dividends. This product allows investors to capture attractive yields while maintaining unlimited upside and conditional protection.

Highlights:

  • Guaranteed coupon of 4.25%
  • 100% participation in the average performance of the basket of underlyings above initial price and absolute coupon
  • Julius Baer Research Rating – Royal Dutch Shell (BUY), Eni SPA (BUY), Total (HOLD)
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