Potential to earn enhanced returns in USD

By: Katya Stead, financial services journalist

Potential to earn enhanced returns in USD with 105% principal protection

Investec has launched a new investment that gives investors access to a basket of leading international indices and offers principal protection of 105% in US dollars with the potential to earn enhanced upside, effectively ensuring that investors garner a positive return.

This is largely due to the context of the markets we are now living in. “We have had a radical money printing, 0% interest rate experiment in the western countries.This hasn’t worked for the man in the street and it’s now resulting in a populist backlash in politics,” said Investec’s Chris Becker at a recent media launch of the new investment.

“Economic policy is partly to blame for this, but people aren’t aware that it is because of zero interest rate policy, they just know that something is wrong and they want change. Policy officials are all saying they have done what they can to drive growth and now finance ministers need to play their part. Finance ministers are now going to take the baton. We are going to have to start looking far closer at what finance ministers are wanting to do in terms of policy and where they want to spend money to try to boost growth. This ties into the long term secular outlook for commodity prices, for inflation and interest rates.”

Japie Lubbe of Investec Structured Products, commented that “the investor in the East Asian Growth Basket Limited will earn two times the growth in the underlying indices, from 105% to 127.5%, with a maximum total return of 150% in US dollars. The minimum of 105% in US dollars will be paid where the basket of indices increases by less than 5% or ends negative over the 5 year term.”

All returns are quoted net of fees, costs and expenses. The 105% is intended to compensate investors for the opportunity cost of remaining invested in an offshore cash deposit.

The weighted basket of indices comprise the following:

  • 20% to the Nikkei 225
  • 45% to the S&P 500
  • 20% to the Eurostoxx 50
  • 15% to the iShares MSCI Emerging Markets ETF

Japie Lubbe explains, “Our investors typically want something that is highly correlated to world equity markets. This is the index composition that we believe represents that and will drive the profit potential of the investment.”

The East Asian Growth Basket Limited is open for investment

The minimum investment in The East Asian Global Basket Limited is USD12 000 (US dollars) or AUD16 000 (Australian dollars). The investment window is currently open and closes on the 15th of June 2017, or when fully subscribed. Interested investors should speak to their financial advisor or stockbroker for more details.

The shares of the East Asian Growth Basket Limited are listed on the Bermuda Stock Exchange and can therefore be sold before its scheduled maturity date in normal market conditions.
Japie Lubbe concludes, “This investment offers an attractive reward relative to the risk investors will be exposed to. It’s for those investors who are seeking exposure to equities if they are positive and who want to eliminate market risk if the markets do badly.”

Investors take on the credit risk of Investec Bank in this investment.

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