Discovery Invest’s new Enhanced Yield Fund provides clients with the ability to earn significant returns

Discovery Invest’s new Enhanced Yield Fund provides clients with the ability to earn significant returns.

At a launch held in Johannesburg, Discovery Invest announced its investment product enhancements which included a newly designed structured fund, the Discovery Enhanced Yield Fund. Compared with traditional interest or income funds, the Discovery Enhanced Yield Fund offers investors the potential to earn significantly higher fixed returns of 15 percent per year.

Discovery Invest’s Head of Research and Product Development, Craig Sher says, “with interest rates at all-time lows locally and globally, investors are searching for opportunities to enhance their investment returns with some capital protection. The Discovery Enhanced Yield Fund is structured to provide investors with the potential to do exactly this”.

This yield of 15 percent is payable if the FTSE 100 Index return is flat or positive at the end of one year, excluding dividends. In this case the capital plus the full return is paid at the end of the year and the fund closes.

If the FTSE 100 Index return is negative at the end of the first year, no amount will be paid. In this case, the fixed return on the Discovery Enhanced Yield Fund will be increased by another 15 percent and the total of 30 percent will be paid at the end of the second year if the FTSE 100 Index return is flat or positive from inception at the end of the second year.

This will continue for up to five years. The Discovery Enhanced Yield Fund will provide a fixed return of 15 percent multiplied by the number of years until a flat or positive return at a year-end is achieved. The full return will only be paid at the end of the year in which the FTSE 100 Index return was positive.

In addition, the Discovery Enhanced Yield Fund offers some capital protection. If the FTSE 100 Index return is below 0 percent at the end of each of the five years, capital protection is provided at the end of the five year period. This capital protection does, however fall away if the FTSE 100 index falls by more than 40 percent at any stage over the five years. In that case, clients receive the return of the FTSE 100 index at the end of the five year period if negative.

Discovery Invest’s innovations over the past seven years has been focused on developing a range of product solutions designed to match client’s needs. This has resulted in assets under management now growing to over R45 billion, a 26 percent increase last year alone.

Sher says a key driver of this growth is the continued single-minded focus on innovation coupled with excellent investment performance from the Discovery Funds, which have attracted almost 80 percent of all Discovery inflows. “We will continue launching products that have the potential to yield excellent performance through the value of integration and cost and tax-efficiency,” he adds.

Technical information on the Discovery Enhanced Yield Fund

Availability

The Discovery Enhanced Yield Fund is available as a limited offer on the Discovery

Core Flexible Investment Plan and the Discovery Essential Flexible Investment Plan.

Term

The investment term is a maximum of five years from trade date. It may, however, close early on each anniversary since inception of the Discovery Enhanced Yield Fund if the FTSE 100 return is flat or positive.

Annual management fees

The fund has no additional ongoing fund fees; however, normal Discovery Flexible Investment Plan administration fees and financial adviser fees will apply.

Availability

The fund will open on 30 March 2015 and close on 8 May 2015 or earlier if capacity runs out. Money received until the closing date will be held in a cash account until the date of trade, which is 15 May 2015. There is limited capacity that will qualify for the yield of 15 percent. Future tranches of the Discovery Enhanced Yield Fund may offer different yields.

Tax

The return from the Discovery Enhanced Yield Fund is considered revenue under current tax practice. Discovery will provide clients with the applicable tax certificate.Discovery Invest’s new Enhanced Yield Fund provides clients with the ability to earn significant returns.

At a launch held in Johannesburg, Discovery Invest announced its investment product enhancements which included a newly designed structured fund, the Discovery Enhanced Yield Fund. Compared with traditional interest or income funds, the Discovery Enhanced Yield Fund offers investors the potential to earn significantly higher fixed returns of 15 percent per year.

Discovery Invest’s Head of Research and Product Development, Craig Sher says, “with interest rates at all-time lows locally and globally, investors are searching for opportunities to enhance their investment returns with some capital protection. The Discovery Enhanced Yield Fund is structured to provide investors with the potential to do exactly this”.

This yield of 15 percent is payable if the FTSE 100 Index return is flat or positive at the end of one year, excluding dividends. In this case the capital plus the full return is paid at the end of the year and the fund closes.

If the FTSE 100 Index return is negative at the end of the first year, no amount will be paid. In this case, the fixed return on the Discovery Enhanced Yield Fund will be increased by another 15 percent and the total of 30 percent will be paid at the end of the second year if the FTSE 100 Index return is flat or positive from inception at the end of the second year.

This will continue for up to five years. The Discovery Enhanced Yield Fund will provide a fixed return of 15 percent multiplied by the number of years until a flat or positive return at a year-end is achieved. The full return will only be paid at the end of the year in which the FTSE 100 Index return was positive.

In addition, the Discovery Enhanced Yield Fund offers some capital protection. If the FTSE 100 Index return is below 0 percent at the end of each of the five years, capital protection is provided at the end of the five year period. This capital protection does, however fall away if the FTSE 100 index falls by more than 40 percent at any stage over the five years. In that case, clients receive the return of the FTSE 100 index at the end of the five year period if negative.

Discovery Invest’s innovations over the past seven years has been focused on developing a range of product solutions designed to match client’s needs. This has resulted in assets under management now growing to over R45 billion, a 26 percent increase last year alone.

Sher says a key driver of this growth is the continued single-minded focus on innovation coupled with excellent investment performance from the Discovery Funds, which have attracted almost 80 percent of all Discovery inflows. “We will continue launching products that have the potential to yield excellent performance through the value of integration and cost and tax-efficiency,” he adds.

Technical information on the Discovery Enhanced Yield Fund

Availability

The Discovery Enhanced Yield Fund is available as a limited offer on the Discovery

Core Flexible Investment Plan and the Discovery Essential Flexible Investment Plan.

Term

The investment term is a maximum of five years from trade date. It may, however, close early on each anniversary since inception of the Discovery Enhanced Yield Fund if the FTSE 100 return is flat or positive.

Annual management fees

The fund has no additional ongoing fund fees; however, normal Discovery Flexible Investment Plan administration fees and financial adviser fees will apply.

Availability

The fund will open on 30 March 2015 and close on 8 May 2015 or earlier if capacity runs out. Money received until the closing date will be held in a cash account until the date of trade, which is 15 May 2015. There is limited capacity that will qualify for the yield of 15 percent. Future tranches of the Discovery Enhanced Yield Fund may offer different yields.

Tax

The return from the Discovery Enhanced Yield Fund is considered revenue under current tax practice. Discovery will provide clients with the applicable tax certificate.