Constant Leverage Certificates

Characteristics of Vontobel Constant Leverage Certificates

  • Suitable in case of trading of strong market trends and momentum-driven market phases;
  • Constant Leverage Certificates reproduce of costs, taxes, or other charges, and leverage the daily price performance of the underlying financial asset;
  • The leverage remains constant for the entire life of the product;
  • Constant Leverage Certificates refer to a Leverage Index* which replicates the daily performance of the underlying financial asset (e.g. FTSE MIB, DAX, S&P 500) with a constant leverage;
  • Investors can participate in the performance of a particular underlying financial asset without having to purchase such underlying financial asset directly;
  • The underlying financial asset may be an index, a precious metal or a commodity.

* The Leverage Index is composed, calculated and published by Bank Vontobel AG, Zurich, a company affiliated to the Issuer and consists of a leverage component and a financing component.

Vontobel Index Portal   Product List  Valuation Time

Investing in a Constant Leverage Certificates

Constant Leverage Certificates offer a simple and efficient way to profit from stable price trends, be they rising (Long) or falling (Short). They do so by leveraging (e.g., 3, 4, 5 or 7) the daily performance of an underlying financial asset, for example an index or a commodity.

Constant Leverage Certificates are calculated with reference to the strike value. In this case, the strike value is the price determined on a daily basis (daily “re-striking” mechanism) and is equal to the closing price identified on the prior trading day if the reference instrument is an index or to the fixing price identified on the prior trading day if the product reflects the performance of a commodity (for valuation times please click here

If the product is held in the portfolio for more than one day, some differences could occur between the Constant Leverage Certificate’s and the related underlying’s financial asset performance. This is called the so called “compounding effect”. The main reason is that the leverage always remains unchanged for the entire calculation period, and so the investment is equivalent to a reinvestment on a daily basis. This is why, Constant Leverage Certificates are basically suited to short-term investment horizons and not to a long-term buy-and-hold strategy.

Constant Leverage Certificates do not deliver any current income such as interest or dividends.

How to use Constant Leverage Certificates?

  • Speculation purposes investments: Vontobel offers a wide range of certificates and underlyings which suit to various risk/return profiles. Favorable performance developments in the underlying financial asset may result in increasing gain - dependent on the factor chosen. Since the leverage works in both directions, capital losses are possible.
  • Hedging purposes investments: Constant Leverage Certificates can be used in order to implement intraday hedging strategies, e.g., Short Constant Leverage Certificates may be appropriate to hedge a portfolio from possible unfavorable daily fluctuations of the market (if during the reference period the market registers a clear negative trend and the underlying financial asset decreases constantly the Constant Leverage Certificates' price will increase proportionally. In this way the investor will have the possibility to hedge his portfolio from possible decreases of the underlying financial asset).


Before deciding to invest, the risks should be taken into account in addition to considering the opportunities. Extensive losses and even a total loss of the capital invested are possible. Please note that Constant Leverage Certificates do not deliver any current income such as interest or dividends. Constant Leverage Certificates are not capital protected products and, consequently, investors may lose their entire invested capital. Investors also bear the risk of the issuer defaulting (issuer risk). Further risks are:

  • Amplification of eventual losses due to the leverage effect;
  • Trading Constant Leverage Certificates may result in losses of all or part of the invested capital.
  • Sideways markets without strong trends can generate significant losses for investors;
  • The price of the Constant Leverage Certificates may differ significantly from the intrinsic value during market turmoil as well as in market phases with significantly higher volatility and/or market phases with low liquidity;
  • Volatile markets, gap risks as well as liquidity risks could lead to an increase of the risk margin in the Constant Leverage Certificate. This is a necessary measure for the market maker in order to manage its risk positions. The market maker may expand the spreads for risk management purposes; the market maker can widen the spreads for risk management reasons;
  • Constant Leverage Certificates are complex financial products requiring continuous monitoring.

Before deciding to invest please carefully read the offer documents available on the issuers' website

For further information please contact
Bank Vontobel Europe AG

Promotional advertisement: Before taking any decision read carefully the Base Prospectus and the related Summary as well as the Final Terms of the product, in particular the risk factors' sections related to the investment, to the costs to the tax treatment, and other information made available to the investors on the issuer's website This document has only information and advertising purposes and does not represent a financial, accounting, legal, or other recommendation. Before taking a decision to buy these products, investors shall therefore independently evaluate the advantages and the risks related to the investment and all the consequent legal, tax and accounting aspects. In this evaluation investors may consult their financial and/or competent advisors.