The Jaltech Developed Markets Autocall
Important to note: The information contained herein is a summary of the detailed term sheet prepared by the issuing entity. In addition, the below coupon is indicative and may vary up or down at the closing date of the investment. Prior to finalising the investment, Jaltech will provide the investor and/or financial advisor with the detailed term sheet as well advise the parties if the final enhanced return is lower than stated below. Investors will have the discretion thereafter whether to proceed with the investment or not.
DEVELOPED MARKETS AUTOCALL
The Developed Markets Autocall is linked to three global indices, namely the S&P 550, the Swiss Market Index, and the Nikkei 225.
The Developed Markets Autocall will automatically redeem and pay capital plus a return of 15% per annum (in USD) if the indices are all flat or positive at the 1st anniversary date or semi-annually thereafter until maturity in year 5.
The investment has a memory feature which means that the 15% per annum return will be rolled over if the payment is not triggered in any of the years during the investment term (see examples below).
HOW HAS THE COMBINED INDICES PERFORMED IN THE PAST?
The main objective for most investors in autocall structured products is for a trigger event to occur so that the return is paid out to the investor.
Within this investment, the trigger event is if the indices are flat or positive at the 1st-anniversary date or semi-annually thereafter until maturity in year 5. Had an investor invested in the Developed Markets Autocall over the past 15 years and been invested until either being autocalled or until maturity, the investor would have had:
- a 97% probability of being autocalled during the term
- a 90% probability of being autocalled within the first three years
- 0% probability of losing a portion of their investment amount
Investments specifics
Currency exposure
USD
Capital protection
100% capital protection provided the worst index has not dropped by more than 35% at the maturity date
Underlying exposure
- S&P 500
- Swiss Market Index
- Nikkei 225
Annual yield
15%
Term
5 years or when autocall is triggered
Minimum investment
R250 000 (which can be spread across Jaltech’s structured products)
Counter party rating
Standard & Poor rating of BBB-
Autocall activation
The autocall will be triggered if the indices are flat or positive at the 1st-anniversary date or semi-annually thereafter until maturity in year 5
Investment closing dates
- 2 October 2023
- 6 November 2023
RETURNS EXPLANATION
The Developed Markets Autocall redeems and pays a coupon of 15% per annum in USD if the indices are flat or positive compared to their starting level, observed at each anniversary from year 1 (thereafter semi-annually) until maturity in year 5. By way of an example, below are three scenarios illustrating the potential payoff of the investment.
SCENARIO 1
| Indices value (relative to starting value) |
Return | Capital returned | Redemption amount | |
| At the first anniversary | Negative | Zero – investment continues | Zero – investment continues | Zero – investment continues |
| At the first anniversary | Flat or positive | 15% | 100% | 115% (investment redeems) |
SCENARIO 2
| Indices value (relative to starting value) |
Return | Capital returned | Redemption amount | |
| At the second anniversary |
Negative | Zero – investment continues | Zero – investment continues | Zero – investment continues |
| At the second anniversary |
Flat or positive | 30% | 100% | 130% (investment redeems) |
SCENARIO 3
| Indices value (relative to starting value) |
Return | Capital returned | Redemption amount | |
| At the end of the 5 year term | -1% to – 35% | Zero | 100% | 100% (investment redeems) |
| At the end of the 5 year term | -36% | Zero | 64% | 64% (investment redeems) |
| At the end of the 5 year term | Flat or positive | 75% | 100% | 175% (investment redeems) |
WHEN IS MY CAPITAL AT RISK?
Investors’ initial contribution has 100% capital protection provided:
1. no default or credit event occurs with respect to the financial institution issuing the note;
2. the worst index is not down by more than 35% at the end of the 5 year term; and
3. the investor remains invested until the maturity date.
The financial institution issuing the note is rated by Standard & Poor’s as BBB-, which is higher than all South African banks, bar one.
EARLY EXIT
Investors can exit before the 5-year term, however, by doing so, the investor will forgo any capital protection. The investment value on early exit will be based on the mark-to-market value of the instrument at the time of early exit. This may result in a gain or loss for the investor.
IMPORTANT DATES
| Closing Date: | Trade Date: | Maturity Date: | |||
| 2 October | Approx 9 October 2023 | 9 October 2028 | |||
| 6 November | Approx 13 November 2023 | 13 November 2028 | |||
ENDOWMENT WRAPPER
The Developed Markets Autocall is structured through a local endowment. The benefit to investors is that income generated from the investment in the endowment is taxed at 30% (versus the current highest marginal tax rate being 45%).
The endowment does, however, limit investors to one withdrawal during the 5-year term, which withdrawal is limited to a maximum of 105% of the invested amount.
FEES
The fees pursuant to this investment include a 1.25% annual fee* and a once-off endowment wrapper fee** of 2.5%. The once-off endowment wrapper fee, is charged in order to make use of the tax-efficient structure within which this investment is wrapped in.
*The annual fee is charged regardless as to whether the investor remains invested until the maturity of the investment or not. Note that this fee will not reduce the investor’s committed capital.
** The endowment wrapper will restrict an investor from withdrawing more than 105% of their investment value during the 5-year term, and the associated fee will reduce the investor’s committed capital by 2.5%.
How to invest?
By simply completing the investment form, Jaltech’s dedicated team will take you through the investment process.
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Complete the application form
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Disclaimer: Terms and conditions contained herein are indicative only and the final terms and conditions will be communicated to the investor prior to investing. The information contained in this communication does not constitute an offer, advertisement or solicitation for investment, financial or banking services. It is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information, therefore, has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. The material is based upon information that we consider to be reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. All illustrations, forecasts or hypothetical data are for illustrative purposes only and are not guaranteed and past performance is not indicative of future performance. The sender accepts no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this communication. Prospective investors should be fully aware of the risks involved in dealing with financial products. Jaltech Management Company is an authorised Financial Services Provider (FSP 49087).
