This investment opportunity has now closed. Please contact us if you would like to be informed of similar investments in future.

Growth Potential

Ideally, you want an investment that has real growth potential, in terms of both:

1.    A significant Participation Rate

and

2.    The selected market / index must have scope for growth


The investment we have selected offers:

1.    Participation Rate of 180%

If the underlying investment grows by 10%, you will earn 18% on top of your capital.

2.    The Growth is linked to 4 Emerging Market Currencies.

The investment will offer 180% of the average growth in the value of the currencies of Brazil, Russia, India and China (BRIC) against the value of the US $ over the 3 year and 6 month term.


Why pick these currencies?

We believe that when world markets recover, that Emerging Markets will outperform Developed Markets, and on the back of this we expect that Emerging Market Currencies will also outperform.

As support for this, let’s look at what happened these currencies versus the US $ during the 2002-2008 period of very strong global growth.

The question is what will the future hold for this Currency Basket?

The selected basket of currencies has fallen back (versus the $) since 2008.

Just as the selected Emerging Market Currencies would be expected to outperform when global markets are climbing, they tend to suffer more in downturns when there is a flight back to safety and traditional currencies, notably the US dollar as illustrated below:

It is precisely these falls in the selected currencies relative to the $ since 2008, that we believe has created the current opportunity.

In addition there is the possibility that as general volatility and risk begins to reduce, that the US dollar itself will start to weaken against other major currencies, as the ‘flight to safety’ reverses. Certainly, the long term trend over the last decade has seen a weakening of the US dollar.

The Chinese Currency deserves specific comment.

This currency is loosely pegged to the US dollar. The Chinese authorities allowed a 21% appreciation in the currency versus the US dollar between 2005 and 2008 but have since pegged it again.

There is huge international pressure building for China to recommence it’s move away from the US dollar peg, and if they do allow the currency to float, the very strong consensus is that it will once again start to appreciate against the US dollar.


Our View on Deposit Rates
We believe there is a real risk that deposit rates will deteriorate over the course of 2010 to more closely approximating ECB rates (1%pa).  Rates will recover thereafter as and when the ECB increase rates, but the medium term outlook for deposit rates is quite poor.


Actions Required

If you are not an existing Acumen & Trust client, please contact our office to discuss your requirements.

If you are an existing Acumen & Trust client and wish to proceed with the investment, we will need:

-    Completed and signed Application Form

-    Signed copy of Reasons Why Letter / acknowldegment of understanding the currency bond brochure

-    Cheque/Draft made payable to Investec

-    Certified Copy of Passport/Drivers license

-    Household utility bill (less than 3 months old)

-    Evidence of PPS Number (eg P60, Notice of Tax Credits, etc)

Note: The closing date for investment in this currency bond is 24th March 2010. [Closed]
 

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