Hey, I'll give my opinion, might be wrong so don't take it as 100% correct.
It looks like they're gearing your investment 2x
Assuming the Rand $ exchange rate stayed as it is, all that is needed for you to hit their cap is (55/2)/3.5=7.85% a year on the S&P500. (This isn't even taking into account compound interest, so over 3.5 years it will probably be closer to 6.5%)
Anything above this will go to them.
You're being paid out in $ too so along with the S&P increasing you've got to hope that the Rand loses value against the $.
So if the Rand depreciates against the $ and the S&P increases by anything over 6.5% Investec will be making quite a bit of money with your money.
Another interesting comparison, all you need to make is 13% per year in order to make 55% over 3.5 years. (Compounded annually.)
Year1 - 100k + 13% = 113k
Year2 - 113k + 13% = 127.7k
Year3 - 127.7k + 13% = 144.3k
Year4 (6months) + 13% = 153.7k
Fees 1.25% year 1, 0.75% year 2 and 3 are all built into the offering.
I don't think there is a catch, they're just banking on way more upside to this than the 55% they're going to give you so it makes it worth the low risk they'll be exposed to in the unlikely scenario that things go bad and they've got to refund your initial payment.
At the Maturity Date if the Index has fallen, the Investor receives his full
capital back in Rands on condition that there is no credit event in respect
of FirstRand Bank Limited as Reference Entity.
And I have no idea what that means
