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Category Investments

Something new

13 November 2004 Angelo Coppola

Investec launches product to be listed on the JSE - Enhanced Dividend Securities.

EDS will offer investors benefits by yielding the same dividends as the underlying share, at a fraction of the price.

EDS has been listed under the Investment Products sector of the JSE. 10 individual securities will be issued, significantly increasing the number of products listed in this sector and offers a number of other benefits, including leveraging of exposure to share price movements, limiting exposure to the downside, the advantage of liquidity provided by Investec and potential tax benefits.

Luzuko Tashe from Investec Treasury and Specialised Finance explained that Enhanced Dividend Securities (EDS) are an investment product that directly tracks the price of an underlying share.

They will be issued at 50-55% of the underlying share price while receiving all the dividends paid by the underlying share. Due to these securities costing less than the underlying share and investors receiving the same dividends they offer the investor an increased dividend yield as well as geared exposure to underlying share price movements.

"This product offers the investor a chance to gain moderate gearing on some of the JSE's largest companies with the added advantage of an increased dividend yield,” says Tashe.

Holders of the EDS are entitled to receive the same dividends that would normally accrue to the holders of the underlying share. Dividends will be paid directly into holders’ CSDP accounts and are tax exempt in the hands of the investor.

They can also be exercised into physical shares at any time during their life. EDS can be freely traded on the JSE and Investec will maintain liquidity by providing a bid/offer price.

Quick Polls

QUESTION

As National Treasury mulls a two-bucket retirement system, mandatory contributions and preservation, regulation 28 is being amended to allow up to 40% of retirement fund assets to be invested in SA-based infrastructure… Which of the following retirement fund ‘tweaks’ would you consider most beneficial to your clients?

ANSWER

Give fund members emergency access to retirement savings
Let fund members invest 40% in infrastructure
Let fund members invest 40% offshore
Mandatory preservation when resigning from a fund
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