Samukelo Zwane
FNB continues to enhance its range of structured investment solutions with the launch of the fourth tranche of its FNB 100 Capital Preserver Autocall (ZAR) product.
Designed to provide South African investors with access to global markets while ensuring capital protection, this innovative solution now tracks two key global indices namely the Bloomberg Luxury Series 1 5% Decrement and the Bloomberg Europe DM Top 30 Basic Resources 5% Decrement index.
Unlike previous versions, which required investors to wait until year three for their investment to deliver returns, this new tranche makes it possible to earn up to 12% from the first year. The investment uses an Autocall structure, meaning that if the index with the lowest return stays flat or has increased at all on any of the annual review dates, the investment automatically matures, and investors receive their capital plus the promised return of between 11% and 12%.
If this doesn’t happen in year one, the investment automatically continues and the opportunity for this generous return remains available in years two, three, four, and five. If no early maturity is triggered, the investment continues until the end of five years, at which point investors will still receive their full capital back – even if the indices show negative performance. This structure increases the chance of earning returns sooner, making it an appealing option in uncertain markets.
According to Samukelo Zwane, Head of Product at FNB Wealth and Investments, structured products have become more accessible in recent years, offering regular investors the kind of opportunities once only available to institutions. “Investors today want a balance between growth and security, especially when traditional investments may not deliver the expected returns. With FNB 100 Capital Preserver Autocall 4 (ZAR), they can benefit from international market performance while knowing their capital is protected.”
Zwane adds that this investment is particularly valuable in the current declining interest rate environment. “Cash and income investments, and potentially even equities, may struggle to provide double-digit returns in the coming years. This product aims to deliver returns of 11% to 12%, making it a strong alternative for investors looking for reliable growth.”
Talha Rahim, Product Portfolio Manager at FNB Wealth and Investments, explains the choice of indices. “We selected the Bloomberg Luxury Series 1 Index and the Bloomberg Europe DM Top 30 Basic Resources Index because of their strong history of growth,” he points out. “Luxury brands benefit from strong pricing power and increasing demand, especially from younger generations, even in declining economic conditions; while the basic resources sector is crucial for global infrastructure and offers a hedge against inflation.”
Rahim says that the decision to track two indices instead of one was made to ensure that FNB had the ability to engineer the Capital Preserver solution in a way that enhances the potential for positive returns, while managing risk effectively. “By using a mix of indices, we provide exposure to different industries, reducing reliance on a single market and increasing the chance of positive performance,” he explains.
Investors can participate in FNB 100 Capital Preserver Autocall (ZAR) with a minimum investment of R20 000, and additional investments can be made in increments of R1 000. The product is available on FNB’s Local Trader platform through FNB Stockbroking & Portfolio Management online platform (shares.fnb.co.za) or through their private advisor. The investment window runs from 3 March 3, 2025 to 2 May, 2025, with trade execution on 9 May, 2025.
“At FNB, we remain committed to offering investment solutions that give South Africans the opportunity to participate in global markets with confidence,” concludes Zwane. “Given the strong demand for previous tranches, the accessibility and affordability of the product, and increasing interest in structured products, we expect significant uptake for Tranche 4 of the FNB 100 CapitalPreserver Autocall solution.”
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