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JSE Exchange Traded notes (etn's)

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What are Exchange Traded Notes?

Wikipedia describes a Exchange-traded note as:

"An exchange-traded note (or ETN) is a senior, unsecured, unsubordinated debt security issued by an underwriting bank. Similar to other debt securities, ETN's have a maturity date and are backed only by the credit of the issuer.

ETN's are designed to provide investors access to the returns of various market benchmarks. The returns of ETN's are usually linked to the performance of a market benchmark or strategy, less investor fees. When an investor buys an ETN, the underwriting bank promises to pay the amount reflected in the index, minus fees upon maturity. Thus ETN has an additional risk compared to an ETF - upon any reduction of credit ratings or if the underwriting bank goes bankrupt, the value of the ETN will be eroded."


Standard Bank Exchange Traded Notes

Standard Bank Commodity-Linker Exchange Traded Notes (ETN's)

Commodity – Linker Exchange Traded Notes (ETN's) offered by Standard Bank Group Ltd, provides investors exposure of transacting in JSE exchange listed security: gold, silver, platinum and palladium.  Commodity – Linker (ETN's) offers a portion of an ounce of each precious metal to investor.

What does this mean for the investor?
Commodity - Linker ETN's trades in rand, and are listed under the "Exchange Traded Notes" section of the JSE Main Board

Commodity - Linker ETN's gold, silver, platinum and palladium, defined as "inward listed securities", provides individuals and corporate investors the opportunity to invest in the ETN's with no impact on foreign exchange allocation limits.

What returns do investors earn form Commodity - Linker ETN's?
A total return index is created form 4 different sources:

  • Return form the price changes in the near dated futures contract in the commodity
  • Interest rate (US dollars) earned form the margin posted form the commodity futures contracts
  • Return earned form changes in the US dollar/SA rand exchange rate
  • Yield form the roll-out-re balancing earned form converting the current futures contract to a more distant futures contract

Why should you invest in Commodity - Linker ETN's?

  • ETN's provides superior returns
  • ETN's provide diversification in portfolios providing non-correlated returns to traditional asset classes
  • ETN's provide competitive returns relative to other asset classes

Standard Bank precious metal exchange traded notes

click here for more information on the standard bank precious metal exchange traded notes


RMB Oil ETN

Rand Merchant Bank Oil Exchange Traded Note (ETN)
Delisted on the JSE 25 July 2014

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