UBS leveraged return note matures and rewards risk-takers

Bullish US investors happy to lose capital at the rate of 2:1 for any fall in the S&P 500 in the wake of the Lehman Brothers collapse were rewarded handsomely in this product, which offered a leverage factor of more than two and no cap on returns

UBS offices in Zurich

UBS issued a leverage return note in January 2009 that linked to the S&P 500 and featured unusually high downside gearing. In addition to the absence of downside protection, any falls in the underlying index meant investors would lose 2% of their invested capital for every percentage-point fall in the asset from its starting level. So, for example, if the S&P 500 fell by 50% or more over the five-year term, investors would have lost all their capital. On the upside, however, the note offered