Investec Structured Products launches two FTSE/JSE Top 40 linked investment products

Investec Structured Products announces the Top40 Geared Growth ESP (‘Geared Growth’) and Top40 Autocall (‘Autocall’), two unique investments linked to the performance of the FTSE/JSE Top40 Index. These are the latest addition to the range of Investec Stru

The products, which require a minimum subscription of R10,000, have similar (three and three and a half year) investment terms, while catering for varying risk and return appetites. The Autocall is designed to give investors an attractive return even if the Index achieves only a modest performance over the period, while Geared Growth offers investors the chance to increase their returns by means of gearing their exposure to any growth in the Index over three and a half years.

Commenting on the products, Brian McMillan of Investec Capital Markets said: “We have designed a set of accessible products for the cautious South African investor in the context of continued global economic uncertainty. While both products present a compelling case for investment, the Geared Growth is designed to significantly outperform the FTSE/JSE Top40 Index should the Index show moderate growth over the period and is suited to investors with more of a risk orientated outlook. The Autocall on the other hand gives investors the potential to earn a much greater return than comparative money market and dividend income funds over the investment period – at a time when global and South African interest rates remain at all-time lows.”

A key advantage of these products is the downside protection which they offer. This is applicable provided the Index does not fall significantly during the term of the investment – and equates to a fall of more than 30% for Autocall or a fall of 15% for Geared Growth.

The upside potential of the Geared Growth product is best demonstrated in the following example: An initial investment of R100,000 with a hypothetical index return of 50% would grow to R167,500 at maturity – a 67.5% return due to the geared effect of the product. “The case for this product with geared equity exposure is supported by research conducted by our team which gives a positive view on the South African equity market,” added McMillan.

Similarly, the positive market outlook supports an investment in the Autocall as an investor would receive a 12% enhanced return even if the index is only marginally positive. “Even if the market falls moderately over the first two years and then returns to a level above that where it started, after three years the investor would receive three times the 12% return, or 36%,” said McMillan.