Author Topic: Offshore Structured Product  (Read 814 times)

IndustryGuy

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Offshore Structured Product
« on: September 13, 2018, 01:40:42 pm »
Hey again

I know this is a very pro-ETF forum and I do not blame you. ETFs are good, cost-effective products, and contrary to popular belief, us brokers do not hate them. I personally have recommended them for many clients. But should you put all your money in ETFs? That depends on your risk-profile. At the end of the day ETFs are full-on equity instruments which do make them a bit more high risk than other products. It may thus not be a bad idea to put some money, at least, in other instruments to negate some of the risk or even to hedge. Thus I know this product may not be for everyone but some may just find a good fit for it inside their overall portfolio.

1. It is an offshore, USD based structured product.
2. It is a fixed investment of 5 years although daily liquidity are provided on a 'willing buyer, willing seller' basis. If no buyer can be found, the issuer will provide liquidity 1.25% away from fair value.
3. Complete capital protection plus 5%. Hence, at the least, you will get a 5% return if markets are down after 5 years in which case you will definitely be beating the market.
4.You get geared upside diversified equity exposure to the following indices: 20% Nikkei225; 40% S&P500, 25% Euro Stoxx 50 and 15% iShares MSCI Emerging Markets ETF.
5. The upside is 2X geared on any growth between 5% and 27.5%. That would be a possible annualised return of 8.45% per annum in USD.
6. These gains are after fees. Whether you go straight to the issuer or do it through us, the costs are the same. There are no hidden costs or surprise fees.

Again, this product is for diversification. I will not recommend throwing your whole portfolio into it but it is good for hedging and diversification.

If you have any interest in this product just send me a pm with your contact details and I will get back to you.

NB: For those who are not aware of it yet, we also offer special rates for offshore transfers for members of this forum. Patrick and a few other forum users have used us before so they can vouch for us. Rand Swiss will do offshore transfers for this forum's users for 0.8% (VAT incl). We do this through a CCM account with Investec which will also pay you 6.5% per annum on any Rands you hold in the account above R10,000. So you can at least earn some interest while you wait for the right time to do the transfer.

Nivek

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Re: Offshore Structured Product
« Reply #1 on: September 13, 2018, 02:40:18 pm »
NB: For those who are not aware of it yet, we also offer special rates for offshore transfers for members of this forum. Patrick and a few other forum users have used us before so they can vouch for us. Rand Swiss will do offshore transfers for this forum's users for 0.8% (VAT incl). We do this through a CCM account with Investec which will also pay you 6.5% per annum on any Rands you hold in the account above R10,000. So you can at least earn some interest while you wait for the right time to do the transfer.
6.5% is not bad. If I left my money there and needed some back for something urgent, could I get it back out? If it does it might make sense to use it for my emergency fund.

IndustryGuy

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Re: Offshore Structured Product
« Reply #2 on: September 14, 2018, 09:24:42 am »
NB: For those who are not aware of it yet, we also offer special rates for offshore transfers for members of this forum. Patrick and a few other forum users have used us before so they can vouch for us. Rand Swiss will do offshore transfers for this forum's users for 0.8% (VAT incl). We do this through a CCM account with Investec which will also pay you 6.5% per annum on any Rands you hold in the account above R10,000. So you can at least earn some interest while you wait for the right time to do the transfer.
6.5% is not bad. If I left my money there and needed some back for something urgent, could I get it back out? If it does it might make sense to use it for my emergency fund.

You can. Just send us an email as to where you would like the money to be sent. We will give you a call to confirm. Payment will take 2 days or can be done immediately for R50 fee. Fee is charged by Investec, not us.

IndustryGuy

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Re: Offshore Structured Product
« Reply #3 on: October 30, 2018, 03:49:10 pm »
Hi,

Got a new Offshore Structure available:

1. Offshore, USD based product dependent on the performance of the Euro Stoxx 50 Index.
2. 5-year investment.
3. Complete capital protection up to -40%. In other words, if markets are negative (but down by less than 40% after 5 years) you will get all your money back.
4. Enhanced return in positive markets. If markets are up by just 0.01%, you will get 55%.
5. Uncapped upside. If markets are up by more than 55%, you will enjoy the full upside.

All returns are after fees and in USD. Please do note that a minimum investment of $25,000 is required.

Again, this is not something you will invest all your money in. It is more to hedge against negative markets while at the same time getting geared returns in positive markets.

Feel free to send me a PM if you would like to know more about the product. You can also send me a mail at [email protected] or contact me on 011 781 4454.

argentum

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Re: Offshore Structured Product
« Reply #4 on: October 31, 2018, 11:42:47 am »
Hi, I have a few questions:
  • Who's the counter-party in this deal? IOW is the deal good unless Investec Bank itself goes bankrupt?
  • What happens if I'm forced to sell before 5 years? Do I get pro-rata, capital back, or a reduced rate?
  • Is that -40% guarantee on the un-geared euro-stoxx50? IOW NOT geared to both + and - side?
  • How are the gains taxed? I assume CGT after the 5 year period?

IndustryGuy

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Re: Offshore Structured Product
« Reply #5 on: October 31, 2018, 01:33:46 pm »
Hi, I have a few questions:
  • Who's the counter-party in this deal? IOW is the deal good unless Investec Bank itself goes bankrupt?
  • What happens if I'm forced to sell before 5 years? Do I get pro-rata, capital back, or a reduced rate?
  • Is that -40% guarantee on the un-geared euro-stoxx50? IOW NOT geared to both + and - side?
  • How are the gains taxed? I assume CGT after the 5 year period?

Hi Argentum,

I should have noted that this product is not with Investec as with the other one. It is a bespoke structure Rand Swiss is doing with Sanlam.

1. The counterparty is a Fitch A rated institution, which is higher than any local bank. If he bank goes bankrupt you will suffer losses. That’s why we don’t recommend putting 100% into any single product. Having said that, if an A rated institution goes under, we would be looking at a massive financial crisis, rivaling that of 2008.

2. There is no liquidity on this product. Do not invest money into it unless you are certain you wont need it for 5 years.

3. I was wrong to use the word geared. Returns are digital, not geared. Hence your return will be 55% regardless of where the market is from 0.01% to 55% after 5 years. If the market is at 0% or down up to -40%, you will get all your capital back. Anything below -40% and there is no longer any capital protection. Downside is not geared though. If it is down by 41%, your return will be -41%.

4. At the current tax schedule, you will pay a 12% capital gains tax rate on the profits. This does not depend on your personal marginal tax rate.

I hope that answered your questions. If not, just let me know.