Investec’s International Titans Basket Limited has, over the past 5.4 years, delivered approximately AUD 54% (ZAR 141%) in returns. It has done this without putting any of investors’ capital at risk.
Japie Lubbe, of Investec Structured Products’ award winning team, 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 new Titans tranche opens for investment
A second tranche opened for investment today, 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 USD 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 truly 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,” concludes Lubbe.
International Titans Basket Limited shares can be purchased with rands or offshore funds via a wealth manager at Investec Wealth & Investment or an accredited financial adviser. The minimum investment is USD12 000.
Additional product features
· The principal preservation references bonds issued by Investec Bank Limited
· 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. For more information visit www.investec.co.za/titans.
