FNB 100 CapitalPreserver Autocall 1(USD)
FNB 80 CapitalPreserver Autocall 1(USD)
The investment environment across the globe has been characterised by heightened volatility, presenting extremely cumbersome and turbulent conditions for investors. This, paired with domestic market conditions and economic constraints in South Africa (such as load-shedding and a high inflationary environment), has resulted in market participants adopting a highly cautious or conservative approach with regards to investing.
Structured products provide an excellent tool for investors, especially those with a risk-adverse framework, to take part in market movements. In times of market uncertainty and volatile equity markets, many investors look for stability in their returns. Hence, these products give clients an opportunity to benefit from rising markets, or in the worst case get back their capital (or a pre- determined portion of the initial capital).
The FNB 100 and 80 CapitalPreserver Autocall will offer full (100%) or partial (80%) protection of the initial investment on maturity, along with exposure to the MSCI World Index over a five-year investment period. The MSCI World Index captures large and mid-cap representation across 23 developed markets with 1 509 constituents - the index covers approximately 85% of the free float-adjusted market capitalisation in each country.
An initial once off fee of 3% will be charged on the invested amount. This fee will not affect the guarantee and invested amount within the product. No additional fees will be applied throughout the lifetime of the investment.
Product 1 is designed to protect 100% of invested capital, while providing exposure to developed equity markets with an annual return of between 5% and 6%.
Product 2 guarantees 80% of invested capital at maturity should the index fall by more than 20% from its initial level. If the index falls less than 20% then the 100% capital guarantee would fall by the same amount. For example, if the client invested $100 000 and the index was down by more than 20% at maturity, the investor would receive 80% of initial capital which amounts to $80 000. If the index fell by less than 20%, say 4%, the client would receive 96% (100% - 4%) of invested capital which would be $96 000. In the best-case scenario, the client will receive 100% of invested capital if the index return is positive at maturity plus an annual return of between 7% and 8%.
The autocall payoff period starts from year three, with an annual observation frequency to maturity (year five). If the index level is above the initial level at year three or year four's observation dates, the investment will mature (without the capability of remaining invested) and the client is eligible to receive an amount equal to (the indicative annual return rate x year x initial investment), plus 100% of the initial investment. Otherwise the investment will mature at the end of year five and the investor will receive a payoff based on the previously mentioned calculation. If the index is below the initial level at observation dates, the holder will not receive this payoff but is eligible to receive their guaranteed investment.
Product 1 example
If the client invests the minimum of $25 000 and the index is above the initial value at an observation date, the client will receive the following (assuming an indicative return of 5.6%):
If the index is not above the initial value at any of the observation dates, the client will not receive the indicative return portion, but will receive 100% of their initial investment at maturity.
Product 2 example
If the client invests the minimum of $25 000 and the index is above the initial value at an observation date, the client will receive the following (assuming an indicative return of 7%):
If the index is not above the initial value at any of the observation dates, the client will not receive the indicative return but is still guaranteed partial capital.
Product 2 guarantees 80% of invested capital at maturity should the index fall by more than 20% from its initial level. If the index falls less than 20%, the 100% capital guarantee will decrease by the same amount e.g., the index falls by 3% which will result in the investor only receiving 97% of their invested capital.
Advantages and benefits
Back-test of MSCI World Index
The graph below shows that the MSCI World Index has consistently delivered a positive performance over a five-year rolling period since 2014.
Risks
FNB Stockbroking and Portfolio Management view
How to apply
Invest via your Portfolio Manager or Wealth Manager.
STEP 1: To find out more about the FNB 100 and 80 CapitalPresever Autocall, speak to your Portfolio Manager, Wealth Manager, or Financial Advisor. During this stage of the process your advisor will discuss the available options and guide you as to whether this product is best suited to your investment needs
STEP 2: Your respected advisor will help you complete the application process and ensure that all the requirements are met to enable the investment to be processed.
STEP 3: We will let you know when your investment is active.
STEP 4: You leave your investment to mature for five years.
Please note that if funds are not available in your account on the date of trade, your trade will not be placed and automatically cancelled.
Note: Investment statements will be available via your Portfolio Manager or Wealth Manager.
