A Structured Product is a fixed-term investment that offers capital growth or income with the benefit of full or partial capital protection. Products are often linked to indices such as the FTSE/JSE Top 40 or the S&P 500 and offer returns based on their performance. The capital protection feature seeks to preserve investors’ original investment in the event of the market falling. Individual products do this to varying degrees.
Absa Structured Products carry either:
Packaged products can be used by all investors. Typically these products appeal to investors who want to gain exposure to stock market performance or achieve an attractive return without taking the risks associated with investing in shares or funds.
Products typically have investment periods of three to six years. At the end of the period, the products mature and, according to the performance of the index (or asset), pay back investors’ original capital (if fully protected) and deliver the stated return. Some products have early maturity features which offer investors the stated return and their original capital should the index match its starting level at one or more predetermined points over the life of the investment.
Yes, although this is not encouraged. Absa plans offer a bi-montlhy window when investors can withdraw from their Plan. However, by exiting before the end of the stipulated period, investors may receive less than they originally invested, and the capital-protection feature will not apply. Additionally, a redemption fee of 1% (inc. VAT) is charged, which is deducted from the proceeds.
All Absa products are backed by Absa Bank Limited (Absa).
Absa plans typically charge around 1-2% per annum, including fees, administration and commission. The charge is taken from the original investment at the start of the Plan – there are no other charges to pay.
No, Absa products link only to the capital value of the relevant index/asset.
Absa products are usually open for investment for four to eight week intervals. When one product closes to new investment, a replacement product is launched. In most cases, this is identical other than the start/end date and investment return. The investment returns Absa offers vary in line with market conditions.
Absa produces valuation statements to investors twice a year. In addition, Absa produces a ‘snapshot’ valuation summary every six months to demonstrate to investors what they could receive at maturity, given market/asset class levels at the statement date.
While Absa does not provide tax advice, we understand that, in most cases, the investor will be taxed the same way as holding a share. Most of Absa’s investment plans involve purchasing a listed share, which the client holds for the life of the investment.
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