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ADVERTORIAL
South African stock market investors who are looking to mitigate concentration risk (the risk of having all your eggs in one basket) through diversification or are looking to protect against adverse market fluctuations will now benefit from the global risk management capabilities of the Barclays network.
Kevin Mondschein, head of the newly formed Structured Solutions Group, says “we understand that everybody’s needs are different. That’s why we are offering two products that allow for either diversification or protection of your large listed shareholdings.”
Absa Wealth has developed two solutions, namely; Total Return Swap and Equity Monetisation in order to help investors with large listed shareholdings to manage their risk.
Total Return Swap
This allows the investor to exchange their exposure to a particular share/s for that of another share or shares listed on the JSE. This may include a basket of individually selected shares, exchange traded funds, or indices listed on both local or international financial exchanges. This solution allows for diversification of concentration risk (the risk of having all your eggs in one basket) whilst retaining ownership of the stock.
For example, assuming an investor has a concentrated shareholding in Company A and enters into a Total Return Swap to receive the returns of Company B over a three-year period.
At inception of the Total Return Swap the investor would swap the market value of their shareholding in Company A and would participate in the equivalent market value of Company B.
At the end of the investment term, the investor would pay the return of the equity performance of stock A (plus dividends) and would receive the equity performance of stock B (plus dividends) less a predetermined annual administrative cost.
Equity Monetisation
Equity Monetisation allows the investor protection against downside movements of their listed share below a pre-determined price. Due to the cost involved in purchasing downside protection, an investor may choose to give up some upside growth potential in exchange for protection against potential future losses.
Through Equity Monetisation investors may also have the ability to borrow at more favourable terms than traditional equity backed lending.
For further information, please contact your Wealth Investment Manager at Absa Wealth, or the Absa Wealth Structured Solutions Group on 011 243 4155 or structuredsolutions@absawealth.com.
About Absa Bank
Absa Bank Limited (Absa) is a wholly owned subsidiary of Barclays Africa Group Limited (Barclays Africa), which is listed on the Johannesburg Stock Exchange and is one of Africa’s largest financial services groups. Absa offers a range of retail, business, corporate and investment banking and wealth management products and services primarily in South Africa and Namibia.
Barclays Africa is 62.3% owned by Barclays Bank PLC. At 31 December 2014, it had 847,8 million shares in issue and a market capitalisation of R154,0 billion. Barclays Africa operates in 12 countries with more than 41 thousand permanent employees and it has 12 million customers. It is uniquely positioned as a fully global, fully regional and fully local bank. It offers personal and business banking, credit cards, corporate and investment banking, wealth and investment management as well as bancassurance.
Barclays Africa’s registered head office is in Johannesburg, South Africa and it has majority stakes in banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, South Africa, Tanzania (Barclays Bank Tanzania and National Bank of Commerce), Uganda and Zambia.
It also has representative offices in Namibia and Nigeria. Barclays Bank PLC has operations in Egypt and Zimbabwe which are an integral part of Barclays Africa’s African business and continue to be run by Barclays Africa operationally.
For further information about Barclays Africa, please visit www.barclaysafrica.com.
FAIS Act Notice and Disclaimer
This brochure/document/material/report/communication/commentary (“this commentary”) has been prepared by Absa Bank Limited trading as Absa Wealth (Registration No: 1986/004794/06) (“Absa Wealth”).
Absa Wealth has issued this commentary for information purposes only and you must not regard this as a prospectus for any security or financial product or transaction. Absa Wealth does not expressly, tacitly or by implication represent, recommend or propose that the securities and/or financial or investment products or services (the “Products”) referred to in this commentary are appropriate and/or suitable for your particular investment objectives or financial situation or needs.
This commentary is not, nor is it intended to be, advice as defined and/or contemplated in Financial Advisory and Intermediary Services Act, 37 of 2002 (“FAIS”), or any other financial, investment, trading, tax, legal, accounting, retirement, actuarial or other professional advice or service whatsoever
(“advice”).
All the risks and significant issues related to or associated with the Products are not disclosed and therefore, prior to investing or transacting, you must fully understand the Products and any risks and significant issues related to or associated with them. This commentary is neither an offer to sell nor a solicitation of an offer to buy any of the Products, which shall always be subject to Absa Wealth’s internal approvals and the execution of all requisite documentation between you and Absa Wealth.
You have to obtain your own advice prior to making any decision or taking any action based hereon and neither Absa Wealth, nor any affiliate, nor any of their respective officers, directors, partners, or employees (in whose favour this constitutes a stipulation on behalf of another) accepts any liability whatsoever for any direct, indirect or consequential damages or loss arising from any use of or reliance on this publication or its contents, and irrespective of whether or not you have obtained independent advice.
If you are a consumer in terms of the Consumer Protection Act No 68 of 2008, as amended, (i.e. a natural person or an entity with an asset value and annual turnover below R2m) then, the above provisions limit and exclude the liabilities which Absa Wealth will have towards you and also place obligations on you.
Any South African person or entity wishing to effect a transaction in any information discussed herein must do so only by contacting a representative of Absa Wealth.
Absa Bank Limited trading as Absa Wealth, Reg No 1986/004794/06 Authorised Financial Services Provider Reg No 523 Registered Credit Provider Reg No NCRCP7. Absa Wealth forms part of the Wealth and Investment Management Cluster.
