Certificates are financial instruments that have a relatively low risk profile compared to warrants and are intended for longer-term investment. Certificates are called discounted certificates, index certificates, reverse convertible certificates, principal-protected certificates, etc. depending on the return profile they offer.
Ak Investment issued its first products in this field as Index Certificates for investors who wish to directly invest in the return performance of different underlying assets on Borsa Istanbul.
Index certificates have a value as a fraction of the underlying asset or indicator based on the conversion rate of the certificate (such as 0.001). Therefore, they undergo price changes in a way that is directly related to the value of an underlying asset or indicator. For example, an investor who purchases 1 lot of a BIST-30 Index Certificate with a conversion rate (multiplier) of 0.01 will have a return or lump sum profile as if they had invested in 1/100 of the BIST-30 Index. In this case, investors should expect the index certificate to increase by 1% if the underlying indicator, the BIST-30 Index, rises by 1% and the index certificate to decrease by 1% if it falls by 1%, assuming that all other parameters remain constant.
If the underlying asset or indicator is traded in a foreign currency, the underlying asset will be multiplied by the relevant exchange rate when converting the underlying asset into Turkish Lira. For example, an investor who buys a DAX Index Certificate with a multiplier of 1/10,000 will have a return or lump sum profile as if they invested in one ten-thousandth of the DAX Index. It should be noted that the value of this certificate is calculated by multiplying the current value of the DAX Index by the EUR/TRY exchange rate. In addition to the price fluctuations in the DAX Index, fluctuations in the EUR/TRY exchange rate also affect the value of the Index Certificate. Even on a day when the DAX Index does not change value at all, a 1% increase in the EUR/TRY exchange rate will cause the value of the DAX Index Certificate traded in Turkish Lira to increase by 1% and a 1% decrease will cause the value of the DAX Index Certificate to decrease by 1%.
