Investec launches defensive structured product designed for volatile markets

By Brian McMillan, from Investec’s Structured Products team

Brian McMillan from Investec’s structured products team

It’s been a difficult year on global stock markets, with even hardened bulls battling to make sense of it all. After one of the worst first six months of a year in half a century, stock markets have battled to find traction as uncertainty about inflation and interest rates have continued to deepen.

Investors will understandably be looking in this market for a defensive type of investment that is able to continue to deliver through these ongoing volatile times. Through the power of structured investments, investors have tools at their disposal, such as the new Investec Global Select Dividend 100 Geared Growth structured product, which is currently open for investment.

The underlying investment in the Investec Global Select Dividend 100 Geared Growth is an index of leading global companies, the STOXX Select Dividend 100 index. Companies in the index have a track record of paying healthy dividends over a number of years. These are businesses with healthy cash flows in established, defensive industries, such as insurance, utilities, banks, resources and real estate.

Companies in the index have traditionally held up well during times of turmoil, providing protection for investors exposed to the broader market. The index has performed relatively well in historically turbulent times, even before taking dividends into account. It’s with this defensive quality in mind that we selected this universe of companies as the basis for our offering.

The Geared Growth product is a three-and-a-half year investment (maturing in April 2026), geared at two times the performance of the index over the period, in rands. This means that should you hold the investment to maturity, you will earn twice the rand performance of the underlying index, converted from US dollars.

In other words, should the Index have a positive performance investors will also benefit from any rand weakness over the period.

Investors will also receive 100% protection in Rands on any downside on their initial investment.

The Geared Growth product could suit a number of investment strategies, from those looking for a high degree of downside protection in a volatile market, to those looking for enhanced upside, for which the two times gearing is designed.

For example, the investment could suit investors looking to earn an enhanced return on a lump sum or inheritance over three or more years. The investment should be part of an overall long-term investment plan that takes into account the investor’s long-term investment goals.

Applications close on 30 September and investors can participate for as little as R50 000. The investment is backed by Investec, as issuer, and JP Morgan Chase & Co (JPM), as the credit reference entity.

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