Important to note: The information contained herein is a summary of the detailed term sheet prepared by the issuing entity. In addition, the below yield 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 as 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.
The Europe & US Tech Autocall is linked to the Bloomberg Transatlantic Tech Titans 2023 Decrement 5% index (“Bloomberg Tech Index”) consisting of a fixed basket of 5 European and 5 US technology companies.
The Europe & US Tech Autocall will automatically redeem and pay capital plus a return of 15% per annum (in ZAR) if the Bloomberg Tech Index is flat or positive at the 1st-anniversary date or 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).
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 Bloomberg Tech Index is flat or positive at the 1st-anniversary date or annually thereafter until maturity in year 5. Had an investor invested in the Europe & US Tech Autocall over the past 15 years and been invested until either being autocalled or until maturity, the investor would have had:
100% of the investor’s initial contribution is protected from loss, assuming no credit event occurs with respect to the financial institution issuing the note, provided the index is not down by more than 40% and that the investor remains invested until the maturity date.
The financial institution issuing the note is a diversified global financial services provider rated by Standard & Poor as A+, which is higher than all South African banks.
Credit rating comparison | |
Issuing entity | A+ (S&P) |
Standard Bank | BB- (Fitch) |
ABSA | BB- (Fitch) |
Investec | Baa1 (Moody’s) |
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.
ZAR
100% capital protection provided the index has not dropped by more than 30% at the maturity date
Bloomberg Transatlantic Tech Titans 2023 Decrement 5% Index
15%
5 years or when autocall is triggered
R250 000 (which can be spread across Jaltech’s structured products)
Standard & Poor rating of A+
The autocall will be triggered if the Bloomberg Tech Index is flat or positive at the 1st-anniversary date or annually thereafter until maturity in year 5
The Europe & US Tech Autocall redeems and pays a coupon of 15% per annum in ZAR if the index is flat or positive compared to its starting level, observed at each anniversary from year 1 (thereafter annually) until maturity in year 5. By way of an example, below are three scenarios illustrating the potential payoff of the investment.
SCENARIO 1
Index 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
Index 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
Index value (relative to starting value) |
Return | Capital returned | Redemption amount | |
At the end of the 5 year term | -1% to – 30% | Zero | 100% | 100% (investment redeems) |
At the end of the 5 year term | -31% | Zero | 69% | 100% (investment redeems) |
At the end of the 5 year term | Flat or positive | 75% | 100% | 175% (investment redeems) |
The Europe & US Tech 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.
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%.
Investors’ initial contribution has 100% capital protection provided:
The financial institution issuing the note is rated by Standard & Poor’s as A+, which is higher than all South African banks.
The Bloomberg Tech Index provides exposure to a fixed basket of the 10 companies listed below. The Bloomberg Tech Index takes the annual performance of the companies and reinvests dividends annually (if any), and then deducts 5% from the performance of the index. The deduction occurs daily by deducting 0.137% (5%/365) from the performance of the index.
The 10 companies are equally weighted within the index with rebalancing occurring quarterly.
Prosus
Prosus is a global consumer internet group and one of the largest technology investors and operators in the world. The group is focused on building meaningful businesses in the online classifieds, payments & fintech, food delivery and education technology sectors in markets including Europe, India and Brazil.
SAP
SAP is one of the world’s leading producers of software for the management of business processes. SAP also develops solutions that facilitate effective data processing and streamline information flow across organisations.
ASML Holdings
ASML is one of the world’s leading manufacturers of chip-making equipment. They design and manufacture lithography machines that are an essential component in chip manufacturing.
Infineon Technologies
Infineon Technologies develops, manufactures and markets a uniquely broad range of semiconductor products for the communications, automotive and memory markets.
STMicroelectronics
ST is a leading supplier of many of the key technologies going into the next generations of consumer devices: Microcontrollers for low and ultra-low power processing, Secure solutions, Sensors and Actuators, Connectivity, Conditioning and Protection, Motor Control, and Power & Energy Management.
Apple Inc.
Apple Inc. (Apple) designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories and sells a range of related services. The Company’s products include iPhone, Mac, iPad, AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch and accessories.
Nvidia
Nvidia is a dominant supplier of artificial intelligence hardware and software. Its professional line of GPUs are used in workstations for applications in such fields as architecture, engineering and construction, media and entertainment, automotive, scientific research, and manufacturing design.
Amazon
Amazon.com is a vast Internet-based enterprise that sells books, music, movies, housewares, electronics, toys, and many other goods, either directly or as the middleman between other retailers and Amazon.com’s millions of customers.
Microsoft
Microsoft is the largest vendor of computer software in the world. It is also a leading provider of cloud computing services, video games, computer and gaming hardware, search and other online services.
Alphabet
Alphabet Inc (Alphabet), the holding company of Google, is a global technology company. It offers a wide range of products and platforms including Search, Google Maps, calendar, ads, Gmail, Google Play, Android, Google Cloud, Chrome, and YouTube.
Closing Date: | Trade Date: | Maturity Date: |
2 October 2023 | Approx 9 October 2023 | 9 October 2028 |
6 November 2023 | Approx 13 November 2023 | 13 November 2028 |
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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).