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Hybrid Investments

Hybrid investments are considered to possess a combination of Fixed Income and Growth investments characteristics. Investment types that fall into this category include Index-linked Guaranteed Investment Certificates (GICs), Principal Protected Notes (PPNs), Convertible Bonds, Capital Trust Securities, etc. When you purchase these Hybrid investments they will offer you a few of the ownership and lending characteristics of both Growth and Fixed Income investments, but not all.

For example, a Hybrid investment may have all or a few of the following characteristics:

  • a guarantee that your savings will be returned to you on a certain date, but no guarantee that you will be paid a regular income (interest or dividend payments) (such as Index-linked GICs and PPNs)
  • potential for a lump-sum payment upon the investment's maturity date. This is not guaranteed, but rather it's dependent upon the success of the underlying investment (such as Index-linked GICs and PPNs)
  • a guarantee that you will be paid a regular income (interest payments), but the issuer can avoid returning your savings by converting the Hybrid investment into common shares (such as Capital Trust Securities)
  • a guarantee that your savings will be returned to you on a certain date and a guarantee that you will be paid a regular income (interest payments), but with the option to convert your invested savings into common shares of the issuer (such as Convertible Bonds)

Note: When you own a Hybrid investment you may or may not

  • have an ownership interest in the issuer
  • earn an income on your savings
  • have your savings returned to you at a future date.

The following table outlines the different types of investments in the Hybrid investment category:

 

 Investment Category

 Investments in each category

 

 

 

 Hybrid

  • Index Linked Guaranteed Investment Certificates
  • Principal Protected Notes (PPNs)
  • Split-Share Capital and Split-Share Preferred Shares
  • Convertible Bonds
  • Capital Trust Securities
  

For more information on Hybrid Investments click on the following links:

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