UOB's Structured Deposit 2013 Series (3)

UOB's Structured Deposit 2013 Series appeared to be quite popular.  Series (1) in August and Series (2) in September.  Now, Series (3) is launched in October, but with some revisions from series (1) and (2): 

Series (3) promotional information:
1. Total Guaranteed Fixed Interest of 9.6% of the Principal Amount over 5 years and 11 months (equivalent to an effective interest rate of 1.6193% per annum)

2. 100% Principal Amount guaranteed when held to maturity. 

3. Minimum investment of $5,000

This structure product has a bonus interest component linked to 5 Singapore companies' shares price performance:

Potential Bonus Interest of up to 6% linked to 5 Singapore Company Shares

Shares in Underlying Basket

Ascendas Real Estate Investment Trust ("AREIT") DBS Group Holdings Limited ("DBS") Keppel Land Limited ("KPLD") SembCorp Marine Limited ("SMM") Singapore Telecommunications Limited("ST")

Assuming an investment amount of S$10,000, held till maturity:

1. Best case scenario - If all 5 stocks are at least 95% their initial values:

	Best Case Scenario (Maximum Interest Potential)
End of Year	Guaranteed Fixed Interest Rate on Principal Amount	Maturity Variable Interest Rate on Principal Amount	Total Interest Payable
1	1.6%	1.0%	2.6%
2	1.6%	1.0%	2.6%
3	1.6%	1.0%	2.6%
4	1.6%	1.0%	2.6%
5	1.6%	1.0%	2.6%
At maturity	1.6%	1.0%	2.6%
Total interest payout	9.6%	6.0%	15.6%
Principal + Interest payout	S$10,000 + S$960 + S$600 = S$11,560

2. Worst case scenario - If any one of the 5 stocks is less than 95% their initial values:

	Worst Case Scenario (Minimum Interest Payable)
End of Year	Guaranteed Fixed Interest Rate on Principal Amount	Maturity Variable Interest Rate on Principal Amount	Total Interest Payable
1	1.6%	-	1.6%
2	1.6%	-	1.6%
3	1.6%	-	1.6%
4	1.6%	-	1.6%
5	1.6%	-	1.6%
At maturity	-	-	1.6%
Total interest payout	9.6%	-	9.6%
Principal + Interest payout	S$10,000 + S$960 + S$0 = S$10,960

The bonus interest structure for Structured Deposit 2013 Series (3) has changed again.  Instead of giving out maturity bonus interest at the end, as in Series (2); there are potential bonus every year again, like in series (1).  The best case scenario in series (3) has total of 15.6% interest, comparing with the total 19.3% interest for Series (1) best case scenario.  The total interest for Series (2) best case scenario is only 12.5%.  

Yes, your principal amount is guaranteed, but it is also locked in for the next 5 years and 11 months.  There is a loss of liquidity, if any other opportunity arises.

I have mentioned in my earlier post that the additional 2% bonus interest for Series (1) is not easy to get.  You would need all of the 5 stocks to be 105% over the initial entry price in order to get the 2%.  And it is 2% or nothing, there is no in-between bonus. 

Now, the additional 1% bonus interest for Series (3) is also not easy to get.  You would need all of the 5 stocks (in 5 different sectors) to be at least 95% over the initial entry price in order to get the 1%.  Any of the 5 stocks performing poorer than 95% entry value, and your bonus interest goes down the drain.

Lastly, the interest rate 1.6% is fixed, which means it won't get higher with market fluctuation.  Currently, ICICI Bank is offering 1.50% p.a. for FD (<$50,000) on 36 months tenure term. 

This structure product supposed to end 12th October,  but is it really a "smarter way to invest"?