Nedbank targets global AI investments with new note

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 16 May 2024
Nedbank’s head office in Sandton.
Nedbank’s head office in Sandton.

Nedbank Private Wealth and Nedbank Corporate and Investment Banking have launched the Nedbank Artificial Intelligence (AI) Equity Linked Note.

In a statement, the big-four bank says this financial product offers an opportunity for South African investors to gain exposure to some of the world’s leading technology companies that are at the forefront of the global AI revolution.

It explains that the Nedbank Artificial Intelligence Equity Linked Note tracks the Solactive Artificial Intelligence Selection PR (SOAISPR) Index, comprising 10 global tech and AI giants.

The index captures the performance of companies that are integral to the advancements in AI, offering investors a gateway to a sector that is poised for exponential outperformance in the coming years.

While historical returns are not a guarantee of future performance, Nedbank says the SOAISPR Index delivered a return of 32.07% for the year to end-March 2024, and 165.85% for the five years to the same date.

According to Grant Meintjes, executive of Nedbank Private Wealth, the Nedbank Artificial Intelligence Equity Linked Note reflects the bank’s commitment to providing financial solutions that align with global technological advancements.

“With the global AI sector experiencing unprecedented growth, this investment product is designed to provide access to new and exciting markets with solid growth potential, while at the same time protecting the rand value of their investment contingent on certain performance specifications,” Meintjes says.

The bank points out that the note comes with an indicative maximum return of 51% over a 3.5-year term, with the potential for reinvestment.

It is also backed up by a 50% contingent capital protection band, safeguarding the investor’s capital over the full term, provided the SOAISPR Index does not fall by more than 51% at maturity, it adds.

Meintjes says these features make for an attractive risk-return profile when compared to traditional equity investments.

He also highlights that because the Artificial Intelligence Equity Linked Note is denominated in South African rands, it is appealing for those looking to diversify their assets across sectors and geographies without the complexities of managing foreign exchange risks.

“The fact that the note is pegged to the Solactive Artificial Intelligence Selection PR Index ensures direct exposure to global AI markets, a sector that is currently receiving significant investment and showing robust performance.

“The companies comprising the index are diverse, spanning geographic regions from the US and Australia, to China and Sweden.”

Meintjes emphasises that the launch of the note – the first of its kind in the South African market – is a strategic response by Nedbank to the growing demand for AI-focused investment products.