Collateral damage prevented with new JP Morgan fund

JP Morgan has launched a new Ucits III compliant fund which offers investors UK equity exposure. Ucits III compliance rules require a fund's assets to be collateralised, which protects investors against credit risk posed by the insolvency of the custodian.

The fund linked to the FTSE 100 index has a life of six years and is annually autocallable with a potential yearly return of 17.25%. The fund kicks out on its yearly observation date provided that the index is at or above its level at strike, at which point the investor will receive back their capital and the specified 17.25% annual return.

If by maturity the index is not at this level but has remained above 50% then investors will receive back their principal. Capital is protected provided that

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