Capital Accumulation IV Shares – Merrill Lynch

Merrill Lynch have just launched a weird structured product. It's called rather inelegantly the Capital Accumulation IV Shares and is a straight bet on the Japanese TOPIX index over-taking the US S&P 500. If at any point over the next three years the TOPIX overtakes the American index the fund winds up and you get a fixed payout. That fixed payout goes up over time - if it happens before Christmas 2007 you get 112p a share (against an issue price of 100p) whereas if it happens after then but before mid June 2008 you get 124p. Every six months after then you get an extra 12p per share up to a maximum payout of 84p at redemption. It's a remarkably weird product – it’s a bet on the relative out-performance of the Japanese markets but it could be a huge winner.