The FNB Global Equity Growth Note provides investors with a concentrated portfolio of high-quality global companies through a rand-based exchange-traded note (ETN) listed on the JSE.
Investment strategy
The Global Equity Growth Note aims to achieve long-term capital growth by investing in equities, including exposure to higher-growth emerging markets, by broadly investing in companies with an above average growth profile. In addition to direct equities the note may selectively include collective investment vehicles as deemed appropriate. The aim is to achieve above average capital appreciation from a diversified range of predominantly large-cap companies. Investors should be tolerant of potentially large fluctuations in the value of the underlying assets.
Advantages and benefits
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The ETN provides investors with access to leading global companies and sectors that they would not have access to without the costs and complexities of investing directly offshore.
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The Global Equity Growth Note complements domestic portfolios and provide global diversification given the concentrated nature of the SA market.
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The note also provides additional rand hedge benefits to a domestic equity portfolio.
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The strategy has been utilised since 2015 and was launched in ETN format in August 2021.
Risks
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The strategy is fully exposed to global equities, which means that returns could be volatile, and capital drawdown is a risk.
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The rand is a structurally weak currency but could experience bouts of strength, in which case rand returns will be lower than hard-currency returns.
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The business is in a net-cash position of $2.4 billion.
FNB Stockbroking and Portfolio Management view
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The FNB Global Equity Growth ETN offers a low-cost solution to offshore investing without eroding the investor's asset transfer limits or the additional complexities associated with investing offshore.
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The rand is a structurally weak currency but could experience bouts of strength, in which case rand returns will be lower than hard-currency returns.
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The strategy has been utilised by the group for over seven years and the performance record has been strong.
