The document discusses two investment products - the Absa Yield Enhancer and the Twin Fixed Return & Growth Protector.
The Absa Yield Enhancer is a 5-year investment linked to the performance of the S&P 500, Hang Seng China Enterprise, and Nikkei 225 indices. It offers the potential for an enhanced annual return and full capital protection if the indices do not fall by more than 40%.
The Twin Fixed Return & Growth Protector is also a 5-year investment with fixed returns of 25% of capital after 1 year and 25% of half the capital after 3 years. The remaining capital is linked to the Credit Suisse GEM 10% Risk Control Index, which balances
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On April 14, 2016 Tracey McNaughton, Head of Investment Strategy at UBS presented to financial advisers on the evolution of asset allocation during a netwealth educational webinar.
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The Asset Allocation Decision-investment ch02.pptxFamiFamz1
Questions to be answered:
What is asset allocation?
What are the four steps in the portfolio management process?
What is the role of asset allocation in investment planning?
Why is a policy statement important to the planning process?
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SBI Equity Savings Fund is an open-ended equity scheme which involves low risk hybrid strategies.This fund operates in a tax-efficient manner. SBI Equity Savings Fund aims to generate income by investing in arbitrage opportunities in the cash and derivatives segment of the equity market. It also aims to generate capital appreciation through a moderate exposure in equity. Learn more about SBI Equity Savings Fund at https://www.sbimf.com/en-us/hybrid-schemes/sbi-equity-savings-fund
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2. Absa Yield Enhancer
A Defensive Equity Investment
Index & Structured Solutions | Absa Corporate and Investment Banking
3. Investment overview:
Minimum
investment
amount of
R250,000
5 Year
term ZAR
Investment
Conditional
capital
protected
when held to
maturity date
The Potential
to lock-in
attractive
returns, even if
equities are flat
or negative
Returns linked to:
S&P 500 Index,
Hang Seng China
Enterprise Index
and Nikkei-225
Index
4. SECRET CONFIDENTIAL INTERNAL ONLY4 | ABSA YIELD ENHANCER
Why the Yield Enhancer Investment?
• Potential to lock in an attractive Enhanced Return each year, payable at maturity, subject to the performance of the
Indices.
• Potential to earn an Enhanced Return even in falling markets.
• Full capital protection on maturity as long as none of the Indices have fallen by more than 40%.
• Diversify your investment portfolio away from more traditional “long only” investment strategies that rely on positive
markets to deliver growth.
• Exposure to offshore equity markets without having exposure to any foreign exchange rates.
• Depending on your own facts and circumstances, investing via a Policy can be more tax-efficient.
5. SECRET CONFIDENTIAL INTERNAL ONLY5 | ABSA YIELD ENHANCER
This Investment may be suitable if you:
This Ivestment is not suitable:
• Potential to lock in an attractive Enhanced Return each
year, payable at maturity, subject to the performance of the
Index.
• Potential to earn the Enhanced Return even in falling
markets.
• Full capital protection on maturity as long as none of the
Indices have fallen by more than 40%.
• Diversify your investment portfolio away from more
traditional “long only” investment strategies that rely on
positive markets to deliver growth.
• Exposure to offshore equity markets without having
exposure to any foreign exchange rates.
• Depending on your own facts and circumstances, investing
via a Policy can be more tax-efficient.
• Have a minimum lump sum of R250 000 to invest.
• Want to lock in returns over the term, provided certain conditions are met, as opposed to only observing the Index
performance on the Maturity Date only.
• Are prepared to risk some or all of your capital if one or more of the indices has fallen by more than 40% on the
Maturity Date.
• Are able to commit your money for five years – any returns payable are paid after the Maturity Date only.
• Want an investment that potentially pays positive returns even in falling markets and are happy to limit your potential
return in exchange for this.
• Want diversification for your portfolio from markets outside of South Africa.
• Regard the terms governing the liquidity of the Investment and the Policy in which it is held as appropriate for you.
6. How the investment works
• The Initial Index Level of each of the three Indices is recorded on the Investment Start Date.
• The closing level of each of the three Indices is recorded on each Annual Observation Date.
• If the closing level of any of the three Indices recorded on an Annual Observation Date is at or above the Barrier
Level, then an Enhanced Return will be locked in for that year.
• Investors will receive the sum of the Enhanced Returns earned each year at maturity, plus 100% of their Investment
Amount back, provided that none of the Indices have fallen below the Barrier Level.
• If one or more of the Indices have fallen by more than 40% at the Maturity Date, investors will receive the sum of the
Enhanced Returns locked in, but their capital repayment will be reduced by the percentage by which the Final Index
Level of the worst-performing Index is lower than the Initial Index Level.
7. Hypothetical scenarios:
Scenario 1 –
Rising markets
• None of the Indices have been
below the Barrier Level
• The Investment locked in an
Enhanced Return of 12% on all
five Annual Observation Dates
• Investors receive back 160% of
their Investment Amount at
maturity.
8. Hypothetical scenarios:
Scenario 2 – Generally
falling markets
• None of the Indices have been
below the Barrier Level
• The Investment locked in an
Enhanced Return of 12% on all
five Annual Observation Dates
• Investors receive back 160% of
their Investment Amount.
9. Hypothetical scenarios:
Scenario 3 – Initially
falling, then rising
markets
• One of the three Indices were
below the Barrier Level on Year
2 and Year 3 of the Annual
Observation Dates
• The Investment locked in an
Enhanced Return on three
Annual Observation Dates
• The Barrier Level was breached
towards the end of year two but
recovered to be above where it
started
by the Maturity Date
• Investors receive back 136% of
their Investment Amount at
maturity.
10. Hypothetical scenarios:
Scenario 4 – Falling markets
and breaching the Barrier Level
• The Indices has been above the
Barrier Level on four of the five
Annual Observation Dates
• The Barrier was breached towards
the end of the Investment Term
and the Final Index Level was
below the Barrier Level
• One of the Indices has fallen by
50% over the Investment term
• Investors receive a 48% Enhanced
Return, but suffer a capital loss of
50% (loss is equal to the
percentage Index loss) – these are
set off against each other
• Investors receive back 98% of their
Investment Amount (i.e. a 2%
capital loss).
11. Taxation
Investors should be encouraged to seek independent tax advice.
In Listed Note format, the investor is taxed directly.
Investment taxed under Five-funds approach in the Linked Endowment.
12. Fees
Advice Fee (paid up front, including VAT) = 2.30% in total
Administration Fee (paid up front, including VAT) = up to 1.15% in total
Life Company (paid up front) = 1,00% in total
100% allocation of the Investment Amount
13. Credit Risk
• If Absa Bank defaults on or before the maturity date and is unable to fulfill its obligations in terms of this investment,
investors could lose a portion or all of their entire initial capital and any positive returns from the Index
• Financial institutions are rated to indicate to investors how capable they are of meeting any payment commitments
• Credit ratings are assigned by two leading ratings agencies: Standard & Poor’s and Moody’s National
• Absa Bank Limited are rated by Moody’s National as Aa1.za and by S&P National as zaAA- at the time of the
preparation of this document
• This means that the rating agencies are of the opinion that the possibility of the bank going bankrupt and unable to
make payments is unlikely
14. Beneficiaries
• The Policy comes to an end when the last surviving Life Assured dies
• Investor may nominate Beneficiaries to receive the Policy Benefits on death
• Can be nominated as a Beneficiary for Ownership or as a Beneficiary for Proceeds
• May nominate up to a maximum of 5 Beneficiaries for Proceeds but only 1 Beneficiary for Ownership
• Beneficiary becomes the owner of the Policy after
death of investor
• Investment continues to run and not unwind upon
death of investor
• Policy ends and investment unwind on death of the
last surviving Life Assured
Beneficiary for Ownership Beneficiary for Proceeds
• Receive payment of the Policy Benefit after death of
investor
• Proceeds shared between nominated beneficiaries
• The policy will form part of the investor’s estate upon
death of the investor
16. Investment overview:
Minimum investment amount of R250,000.00
100% capital protected when held to maturity dates (1,3 and 5 years)
5y term ZAR Investment
Returns linked to the Global Equity Index
Fixed Return of 25% of your capital after 1 year AND 25% on half your capital after 3 years
19. The Index
• The Credit Suisse GEM 10% Risk Control Index
• The Index designed in collaboration between Absa and Credit Suisse
• Index consists a long-only portfolio of global equities (the “Equity Component”, or “Equity
Portfolio”) and US treasuries through futures (the “Fixed Income Component”).
• The Equity Component is rebalanced on a quarterly basis and selected from global developed
equity markets, including the US, Europe and Australasia.
• Exposure to the Equity Portfolio will be based on its observed volatility. If its observed volatility is
lower than 10%, the Index will allocate more than 100% to the Equity Portfolio, subject to a limit
of 150%.
• Conversely, the Index will lower its exposure to the Equity Portfolio as its volatility increases.
22. Taxation
Investors should be encouraged to seek independent tax advice
Investment taxed under Five-funds approach in the Linked Endowment
We are utilising the assessed tax loss offered by Hollard
The brochure points out the net and gross returns payable on the fixed return
component/leg
23. Fees
Advice Fee (paid up front, including VAT) = 2.30% in total
Administration Fee (paid up front, including VAT) = up to 1.00% in total
Life Company (paid up front) = 3.75% in total
100% allocation of the Investment Amount