Nedbank launches AI Equity Linked Note, what is it?

Nedbank has taken a leap towards harnessing the investment potential of artificial intelligence.

What does this mean?

It means Nedbank Private Wealth and Nedbank Corporate and Investment Banking have launched the Nedbank Artificial Intelligence Equity Linked Note.

This is a financial product that offers a unique opportunity to South African investors to gain exposure to some of the world’s leading technology companies at the forefront of the global AI revolution.

What does this Note do?

The Nedbank Artificial Intelligence Equity Linked Note tracks AI selection PR Index (SOAISPR), comprising of 10 global tech and AI giants.

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

Nedbank reports the SOAISPR index to have delivered a return of 32.07% for the year ending March 2024 and a 165% for the five years to the same date.

Nedbank Private Wealth Executive Grant Meintjes said the AI Equity linked Note reflected the banks’ commitment to providing pioneering financial solutions that aligned 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,” Meintjes said.

He added how the note would contribute towards protecting the rand value of user investment contingent on performance specifications.

The AI 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 clients’ capital over the full term, provided the SOAISPR index does not fall by more than 51% at maturity.

He adds: “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,” Meintjes explains, “and the companies comprising the index are very diverse, spanning geographic regions from the United States and Australia to China and Sweden.”

The introduction of the note is a strategic response by Nedbank to the growing demand for AI-focused investment products.

The introduction illustrates Nedbanks’ commitment to its role as a leader in innovation, particularly in the financial and digital sectors.

Applications for investment in the Nedbank Artificial Intelligence Equity Linked Note can be made via the Nedbank Online Share Trading contact centre or a Nedbank Stockbroking branch.

The note will be open for applications between 13 May 2024 and 7 June 2024, with the investment set to be listed on 14 June 2024.

The note will subsequently be listed under the Nedbank Structured Notes Programme on the Johannesburg Stock Exchange on 24 June 2024.

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