Investec launches Euro Stoxx 50 Multiplier

A new structured product offering geared offshore exposure with limited downside potential.

Forecasts for 2015 see the year starting in much the same way as 2014 ended; with a high degree of volatility in markets globally and low risk sentiment in South Africa. Meanwhile in Europe a weakening Euro and the increased likelihood of quantitative easing may provide some relief to asset prices, as was seen in the US markets over the last few years.

The Investec Multiplier offers local investors the opportunity to invest in the performance of the Euro Stoxx 50 in Rands, with some capital protection to guard against a fall in the index.

The product is geared in such a way that maximum benefit can be realised from a small price movement. The Multiplier offers investors the potential to realise 10 times the growth in the index up to a maximum return of 100%.

Brian McMillan of Investec Structured Products explains: “Given the current expectation of muted growth in European markets, Investec aims to give the investor as much gearing as possible to a small move in the Euro Stoxx 50 index, hence the 10 times gearing and a maximum return of 100%. This means if the index only moves up 3.2 percent, the investor receives a 32% return, while the index would have to double to outperform the product. Similarly the index would have to fall by more than half before the investor’s capital was at risk.”

While the principal protection is provided only in the event that the index does not fall by more than 50% during the 3.75 year term of the product, if the index falls and recovers by the maturity date, the investor will still receive the 10 times geared return.

“This unique opportunity provides the investor with the best of both worlds as they receive gearing on the gains while getting a level of capital protection on the downside” said McMillan.

“The great thing about the gearing is that the Euro Stoxx 50 index only needs to increase by 10% over the 3.75 years for the investor to double their investment in Rands,” he added.

Euro Stoxx50 Multiplier Payoff Profile at expiry

The product can be acquired through a registered Financial Advisor or Stockbroker. The closing date is 20 February 2015.

Visit www.investec.co.za/multiplier for more information about Investec’s Growth Structured Products.