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Investment and Hedge Fund Products

Investment and Hedge Fund Products

Investment and Hedge Fund Products

INVESTMENT PRODUCTS

Dual-Currency Deposit (DCD)

DCD is the deposit form of foreign currency option sales. This product yields a higher income than deposit in return for the risk of receiving the deposit in another foreign currency.

  • In DCD transactions, the customer sells the bank its right to buy or sell a certain foreign currency at a certain maturity by taking risks according to market projections, aiming to increase it deposit yield through premium earnings.
  • In the event of the option to exercise on maturity, there is a risk of losing from the deposited principal.
  • By taking a limited risk, investors have a chance to yield an income higher than market interest rates.

HEDGE FUND PRODUCTS

FORWARD

In forward transactions, the maturity, price, and amount of a commodity, which is due for delivery at a future date, are set and agreed upon from today. Forward can be described as a protection technique against foreign currency fluctuations. The parties agree on the contract date (value date), amount, price, and the date of exchanging money (maturity).

  • It allows to control foreign currency risk.
  • It protects against adverse effects of foreign currency fluctuations since in the event of import, export, deferred payment or collection, the exchange rate is set in advance.
  • It eliminates the uncertainty of exchange rate arising from the floating exchange rate system.

OPTION

In options contracts, the party that obtains the option for a certain premium gets the right to buy or sell a certain financial product at a certain maturity and price, but without having to do so; in the event it is requested by the buyer, then the seller of the option is required to sell or buy.

  • Investors that wish to earn a premium income are advised to sell options.
  • Investors that wish to be protected from risk and fix the future value of the asset are advised to buy options.
  • The income of a natural person is subject to withholding tax of 10 percent.

FOREIGN CURRENCY/PARITY TRANSACTIONS

  • Customers are given a chance to perform transactions at competitive prices so as to turn global market fluctuations in parity into earnings.
  • Place an “order” (order to buy or sell foreign currency) for USD/TL and FX/FX transactions of 500,000 and more.

SWAP

The English word “swap” means to “barter or exchange” in Turkish. In its financial application, it describes the swap transactions of foreign currencies or securities, or their cash flows, in other words payment obligations, at the end of or during a certain period. 

Foreign Exchange Swap (FX Swap)

Futures contracts to exchange a currency with another one and to return the exchange principals at the end of a certain period. In Foreign Currency Swap transactions, exchanged amounts at the beginning of a transaction are returned on the maturity date set in the contract, based on the exchange rate/parity also set by the contract. In other words, a foreign exchange swap is a combination of the spot foreign currency transaction performed on the contract date and the reverse forward transaction which was agreed up on the first transaction date.

Interest Rate Swap (IRS)

Transactions in which customers mutually exchange interest rate flows that are calculated with the methods within a certain period, to be protected from interest rate risk arising from interest rate fluctuations or to yield income through interest rates changes. There is no exchange of principal.

Cross-Currency Swap (XCCY Swap)

Cross-Currency Swap is a combination of the Interest Rate Swap and Foreign Exchange Swap. This transaction aims to protect customers against foreign currency risk arising from obligations/receivables as well as against interest rate risk. In other words, the customer gets to exchange an obligation/receivable in a certain foreign currency into another foreign currency. Both the principal and the interest rate are exchanged.

Checking Account (TL/Foreign Currency)

Use your Checking Account in Turkish lira or foreign currency to easily perform all banking transactions such as cash withdrawals, money transfers, EFTs, card payments, bills, and periodic payments.

Time Deposit Account (TL/Foreign Currency)

Open a Time Deposit Account in Turkish lira or foreign currency to earn interest for a certain period based on a set periodic interest rate and generate income from your savings without incurring any risk. Unless stated otherwise by you, your account is renewed at the end of maturity with the same maturity and disclosed interest rates. If you like, you can transfer the earned interest into your chequeing account to use your earnings as you wish.

Repo

You can invest your money at a maturity you desire with the low-risk investment tool repo.

Treasury Bills/Government Bonds

ABank sells its customers treasury bills and government bonds in the amounts they desire. By purchasing treasury bills, you can derive high profit with the securities for which the state promises payment on maturity.

Stocks

AMenkul from ABank offers brokerage services in stock trading. You can trade in stocks every day during the week in parallel with the CBT sessions.

Mutual Funds

You can invest by taking into consideration the risks and yield based on the fund types with the mutual funds which offers investment tools such as treasury bills, stocks, and repo. Thus, earning a high yield independent of maturity.

Type A and Type B mutual funds are available for you. Type A fund contains a minimum of 25% stocks, and it helps you take advantage of the stock market with minimal risk. Mainly made up of treasury bills, government bonds, repo, precious foreign currency, and metal, the Type B fund offers low-risk investment.

Portfolio Management

ABank acts as a broker for AMenkul to manage customers’ stock and fixed income security investments. Our goals include providing guidance to large volume retail customers with a broad horizon and to corporate customers.

Eurobond

Eurobonds are debt instruments – generally long-term – that governments or companies issue in foreign currency to generate resources outside their countries.

Eurobonds are traded in international primary and secondary markets.

Market participants include;

  • Countries
  • Companies
  • National and International Banks
  • International Funds and Pension Companies
  • Corporate and Retail Investors

Features:

  • The coupon rate may be fixed or variable. It can be paid in six-month or one-year maturity. Usually, in Turkish Eurobonds, USD bonds, and EUR bonds pay coupons every six months and one year, respectively.
  • They are usually issued term; however, in the secondary market, they can be turned into cash without waiting for maturity under the market conditions on the date of liquidation. Above-expected earnings can be achieved in a market with declining interest rates, whereas rising interest rates can curb the customer’s income, moreover they may lead to loss if they are sold.
  • They are usually issued to the bearer; however, they cannot be delivered physically.
  • No withholding tax is applied to Eurobond coupon payments. The investor is required to declare its earnings.
  • All you need is a current account to perform a Eurobond transaction.
  • The difference between buying and selling quotations depends on the issue’s liquidity and transaction volume.
  • The swap value date is the transaction date plus three business days.
  • In addition to the Eurobonds issued by the Treasury, there are Eurobonds issued by companies.
  • Our Bank sells Eurobonds in minimum $10,000 or €10,000 amounts with nominal values of $1,000 and €1,000.

More information is available at ABank Branches. Click for the nearest ABank Branch.


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