AXA Structured Capital provides a way for those investors who have a heightened fear of market risk to still participate in the market while maintaining some measure of downside protection.
Structured Capital Strategies features two key underlying elements. First is a built-in downside buffer that reduces or may eliminate the negative impact of market volatility to the first 10% to 30% of loss in index value, depending on the investment option makeup. Second is a Performance Cap Rate on the upside appreciation, which as of January 18th was set at 140% for the 5 Year S&P 500 Index Segment with a -10% Segment Buffer. The MSCI EAFE Index Segment is uncapped (see figure). The downside Segment Buffers provide options for investors looking to build a portfolio via domestic, international and commodities indices over varying time horizons.
Through the product’s Structured Investment Option, investors design a portfolio choosing from a dashboard of 15 equity and commodity index-linked segment types with upside caps and downside buffers customized to individual time horizons. Segments are generally made available for new investment on the 15th of the month. AXA Equitable will absorb the first -10%, -20% or -30% of any loss in the event of negative index performance, depending on the selected segment index, duration and buffer. Together, the segment buffer and cap help to stabilize the impact of volatility.
At the end of each one-, three- or five-year segment period, investors have the flexibility to re-allocate the maturity value of the segment to a new segment or transfer their gains to other investment options available within Structured Capital Strategies, depending on their needs and objectives. For more details on the product’s mechanics, please refer to the Structured Capital Strategies prospectus.