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Born in the USA: discovering the S&P 500

Today is Monday, I have just woken up to my iPhone alarm and as I get out of bed, I put on my Nike running gear that I carefully laid next to my bed. I come back from my run that has been recorded on my Garmin watch to shower with my Pantene shampoo. I put on some Gap Jeans, a t-shirt and my Tiffany bracelet that my family gifted to me at Christmas. I eat Kellogg's Special K and almond milk for breakfast, then brush my teeth with a Colgate toothbrush, and finish preparing by applying my Clinique face cream.

On my way to work I grab a latte at Starbucks and when I get to the office, I take out my Apple laptop and start working on the business plan on Microsoft Excel. At lunch I remember to order a new bike helmet on Amazon Prime, ready to be delivered the next day, and I pay using my Oval Pay Visa card. I text some friends on Whatsapp to confirm our dinner plans, nothing special, just Chipotle for some spicy mexican food. I get home early and watch something on Netflix before falling asleep in my Victoria’s Secret pajamas.

You can probably relate to my not so exciting day by looking around your home, or even just scanning through the most used apps or websites, and you will realise that brands like the ones above are part of your daily life too. What they all have in common is that they are all brands of products sold by companies that make up part of the S&P 500.

What is the S&P 500 index?

The Standard & Poor’s 500 is one of the leading performance indicators of large capitalisation companies listed on US markets. It is the main equity benchmark for stocks listed on the Wall Street stock exchanges.

The index as we know it today was created by the Standard & Poor's company and has been calculated since March 4th, 1957 by using advanced calculations. Before 1957, when there were still no computers, the S&P index contained only 90 stocks. The components of the S&P 500 are selected by a committee and have changed significantly over time. Between its inception, and its 50th anniversary in 2007, only 86 of the original 500 companies remained part of the index. The other 414 either went bankrupt, were taken over, or removed from the index. In that 50-year span, nearly 1,000 companies had made their way into the index, a symptom of a radical change in the composition of the US and global economy.

In reality, there are 505 stocks in the index, since two types of shares are listed for 5 companies (for example Alphabet, Google’s parent company). Although most of these stocks are related to American companies and it is considered to be one of the best representations of the U.S. economy, the geographic criterion is nonetheless not discriminatory.

Why invest in the S&P 500?

The companies listed in the S&P 500 represent 80% of the total market capitalisation, meaning they are the biggest and most valuable companies. At Oval we wanted to give everyone the ability to invest in a product that follows this index for a number of reasons:

-By investing in a certificate that follows the performance index, you can get the performance of the companies inside it without having to trade them singularly. Did you know that buying a single share of each company in the S&P 500 would cost around $64,475?

-If you look at the total return of the index for the last 30 years, only have had 7 years of negative performance, one of these is 2020.

Born in the USA features

With Born in the USA we are giving our users the opportunity to invest in a product that tracks the S&P 500, starting from 100€. But it also has some very special features. You can enjoy the upside of the market, whilst having your initial investment protected 100% against losses when held to the maturity of 5 years.

You can sell your position after the first 100 days with no fees at the end of day market price shown in app, with a maximum exposure of 10% (it’s the maximum you can ever lose no matter how bad the S&P 500 actually performs). And like our FixedRate product, we’ll collect investment orders until June 10th, and it is not possible to set up recurring investments.

What is the potential return?

Capital protected products are a great way to see your money grow without the risk of losing the initial capital invested. If you compare the potential performance of Born in the USA in 5 years to a term saving account by any Italian bank that today offers about 0.1% (average of the large banks saving account offers today), this can be your potential return.

* Representation of the Best Case Scenario, the Worst Case Scenario offers a minimum return of €10,000. Past performance is not a reliable indicator of future performance. Future indicative performance as per the scenario in the KIID.

Who is this product right for?

With Born in the USA we want to make sure that every investor feels included. We have kept a very low initial investment amount that is protected at maturity. This means that even the shyest investor can take advantage of a possible improvement in the market over the next 5 years, without risking to lose their money. We also believe that the S&P 500 represents a great opportunity to invest in companies and products that we all know and love without the cost of buying them one at a time or the need to have knowledge on what company is better than the rest.

It is a great opportunity to learn the value of investing, of earring compounded interest of up to 12.2%* per year without any downside. And for those that have an emergency and cannot hold for so long, they will be able to disinvest daily (after the initial 10o days) at end of day market price and no extra cost. We hope this will convince even the most timid investor to start their journey to a better financial future.

Product information documents are available in the app. Oval does not offer investment advice. If you are not sure that the product we offer is suitable for you, contact a financial advisor. Past performances are not indicative of future performances.

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