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Convertible Money Market Units (CMMUs)
Return Pattern of Convertible Money Market Units (CMMUs)
Unlike the more popular return of principal equity-linked notes, convertible money market units provide a high return if an equity-linked instrument appreciates but provide full participation (except for the accumulated yield) in a downside move if the value of the equity instrument or index declines. Whereas an equity-linked note provides a return pattern often reminiscent of a long call, the convertible money market unit provides a return pattern similar to that experienced by a covered call writer. Someday a philosopher or a psychiatrist will analyze why institutional investors generally sell covered calls rather than buy puts against their portfolios but tend to buy equity-linked notes rather than convertible money market units. Also called Synthetic High Income Equity- Linked Debenture (SHIELD). See Equity-LinKed Security (ELKS), Structured Note.
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