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Investec structured product re-opens for investment

Cape Town - Investec’s International Titans Basket Limited has, over the past 5.4 years, delivered approximately AUD54% (in rand terms 141%) in returns.
 
Japie Lubbe, of Investec Structured Products’ explains: “The product payoff, in this instance, provided enhanced performance relative to the selected markets via geared upside. This was achieved with the assurance that the principal was protected.

A second tranche opened for investment on Monday 18 July 2016, as post-Brexit caution, prolonged volatility, rock-bottom interest rates and widespread political uncertainty continue to cause wealthy investors to look outside of cash and vanilla equity investments.
 
In this offering, investors have access to the potential of earning two times the MSCI World Index in dollar to a cap of 50%. This is provided in a five-year targeted investment in offshore listed shares in International Titans Basket Limited.
 
“The first tranche of International Titans is one of our best performing products to date, so rolling the investment over into a new term with a potential 8.45%pa internal rate of return in USD is attractive,” says Lubbe.
 
Investors in the new tranche will benefit from a minimum 105% principal preservation in US dollars, if held to maturity. They will also enjoy 200% participation in the growth of the MSCI World Index, from 5% above the initial index level up to a limit of 27.5%. The potential maximum return from the investment is therefore 50% in USD (5% + 45%).
 
MSCI provides international access

The MSCI World Index is diversified, presenting developed market exposure to large and mid-cap counters across 23 markets. With 1 649 constituents, the index covers approximately 85% of the free float-adjusted market capitalisation in each country.
 
Further, exposure automatically reweights according to how the markets are performing across a wide range of industries. The top holdings are familiar household names like Apple, Facebook, Microsoft, Exxon Mobil, Johnson & Johnson and General Electric.  
 
Performance tests prove favourable

Based on historic back testing of five-year rolling periods, measured weekly since 1986, the historic probability of achieving a return of less than 5% over the five year term via a direct investment in the MSCI index was 25.5% (calculated inclusive of net dividends). The minimum return provided by the International Titans product is therefore an attractive feature.
 
“With the implied US dollar/rand forward rate depreciation over the investment term indicated to be over 40% and the MSCI World Index’s (MXWO) current PE ratio trading at 20.9 against the long term average of 21.3, we expect the share to have the potential to perform well in both hard currency and rand terms,” says Lubbe.
 
International Titans Basket Limited shares can be purchased in rand or offshore funds via a wealth manager at Investec Wealth & Investment or an accredited financial adviser. The minimum investment is $12 000.
 
The principal preservation references bonds are issued by Investec Bank. As the shares are listed, there is potential for shareholders to dispose of their shares during the term of the investment.
 
The International Titans Basket Limited is open for investment and will close on Monday 3 October 2016.

Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers. Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.

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