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:
Investments in each category
For more information on Hybrid Investments click on the following links: