Investors who worry that today's wobbly markets herald a downturn may be tempted to sell their investments and park the cash under their mattresses. This is an understandable reaction, but there are almost certainly better options.

Societe Generale certainly thinks so. It has put together a structured note that gives investors exposure to a basket of global bond funds that are decidedly unwobbly. The Flight-to-Safety Guaranteed Note, as its name suggests, promises to keep investors' capital safe, but it also gives them the opportunity to leverage their investment if the funds are performing well.

"Markets are volatile and toppish right now," says Kingston Lai, SG's Southeast Asia head of structured products. "There are bubbles everywhere, in so many markets and across asset classes, so now is a time for investors to make a flight to safety."

Using constant proportion portfolio insurance (CPPI), the structure provides 100% capital protection at maturity and, if all goes well, should pay out an annual coupon of 1% over the interbank rate for the first four years, plus whatever cash the strategy has earned at the end of five years, which could be zero. The note is available in US-dollar or Singapore-dollar tranches.

The basket comprises three US dollar bond funds: 50% in the Pimco GIS Total Return Bond Fund, 30% in the Credit Agricole AM Obligations Internationales and 20% in the Templeton Global Bond Fund. During the past five years these funds have provided a yearly return of 9.26% with annual volatility of 5.16%.

CPPI strategies use a dynamic hedging tool to constantly monitor the exposure to the underlying assets and adjust the amount of leverage according to how risky the investment is. This note's exposure to the global bond funds can vary between zero and 200%, and is expected to start on day one at between 58% and 78%.

Of course, this kind of structure doesn't come for free. The hedging cost is roughly 1.25% of the dynamic basket's value each year and the capital protection fee, for the Singapore-dollar tranche, is 0.45% of the exposure to the underlying bond funds each year, and 0.3% for the US-dollar tranche.

The notes cash out and stop paying coupons if the exposure to the bond funds is wound down below 5%. Investors will only get their principal back at the end of the five years.

The notes are distributed in Singapore by ABN AMRO, DMG & Partners Securities, OCBC Securities, RHB Bank, Standard Chartered and UOB Kay Hian. The offer period is open until October 31.