SOUTH AFRICA STORY
Royal Bank of Scotland (RBS) has recently launched a new accelerated tracker that gives exposure to South Africa’s stock index, the FTSE/JSE Top 40 index. This is the second South African product it has launched in recent weeks. It recently launched covered warrants on the same index. Ben Board from RBS says that the South Africa story is particularly compelling in the run-up to the World Cup: “There is a history of the host country of major sporting events experiencing an economic boost, I think the same will happen for South Africa.” But for those investors not interested in football, Board says this trade is also a play on China: “The Johannesburg Stock Exchange is heavily weighted toward the mining sector, and if China continues to experience rapid growth then they will need more and more raw materials.” The accelerated tracker has a maturity of three years and offers a potential return of 1.6 times the FTSE/JSE Top 40 index. Your capital is protected as long as the index does not fall 30 per cent from the time you purchase the tracker, and gains are capped, which means that you won’t receive any upside if the index rises by more than 45 per cent from your entry level.
RBS is hosting a free seminar on investing in emerging markets with David Stevenson, who writes the Adventurous Investor column for the FT Weekend. The seminar takes place tonight from 5.30pm to 7pm at RBS’s Bishopsgate office.
ETFS FOR INSTITUTIONAL INVESTORS
Seven new leveraged ETFs for institutional investors have been launched by db x-trackers. Three of the new products will track short stock indices including the German Dax, EuroSTOXX 50 and the S&P 500. Because they are leveraged these ETFs will provide two times daily inverse exposure to the indices. These products are only meant to be held short-term and are designed for institutional investors. ETFs held for longer than one day may not gain exact double returns due to the effects of compounding. It has also launched four new long ETFs that track the same indices and work in the same way.
Last week world gold ETF holdings hit an-all time high of $68bn, after the gold price in euros and sterling surged to record highs. According to ETF Securities, investors are increasingly looking to gold as a hedge not just against US dollar weakness, but also sovereign risks in the UK and Southern European economies.