The ETN Thread

[Spreadsheet Ranger]

I thought it might be good to have a thread all about the infamous ETN.

 

I want to buy the ABSA NewWave GBP Exchange Trade Note. 

 

 

Each NewWave GBP Currency Exchange Traded Notes (ETNs) is designed to provide investors with an easy-to-access and liquid investment in Great British Pounds, similar to having a currency deposit account with a financial institution. Any potential investor should, prior to investing ensure that they have some understanding of currencies and how they trade.

 

Each note equals a fixed principal amount of £1 and will accrue interest on a daily basis at the overnight LIBOR rate minus a 0.20% interest rate spread.

 

Interest will be distributed on a semi annual basis.

Fees: No fees are charged, the Issuer earns the interest rate spread.

 

Source: http://etfcib.absa.co.za/Products/ExchangeTradedNotes/Currencies/NewWaveGBPETN/Pages/default.aspx

 

 

My reasoning is that I feel our ZAR has a one way trajectory and that is down (or up in currency terms) so hedging against the ZAR by buying pounds just sounds right to me? The reason why I picked or am thinking of picking the GBP over the USD is because of the recent #Brexit dip and I am sure they will recover that plus our currency's downfall should equal profit.

 

I am thinking of buying the ZAR/GBP ETN and then once that has recovered I will move it all accross to the ZAR/USD (NewWave USD Exchange Traded Note) since the US is and will be the strongest economy in the world as long as the world works like it does now ie Banks.

 

So now my question comes; What are the pitfalls here? The only ones I see is if ABSA collapses and to me that seems unlikely, but then again so dit the collapse of Deutsche Bank.

[Bandit]

Growth is almost entirely depended on the Rand tanking. The interest you earn on those is close to nothing.

An alternative is opening a Global Account via FNB (or similar). Difference is you'll have real Pounds instead of Rands invested as Pounds. Downside is that there are exchange control fees.

 

Personally I reckon this is way too much of a risk. Better off investing in the British economy (DBXUK) which will give you the Rand hedge as well.

[Spreadsheet Ranger]

I hear what you are saying, I am just thinking of ways to get a bit of cash/currency type investments into my portfolio for the sake of more diversification and I am totally betting on the rand tanking which it has been doing since forever thus a good bet in my mind would be to go long on anything ZAR/...

 

The FNB account crossed my mind, but I want to stick to EasyEquities so a ETN was my next best thought

[Bandit]

DBX ETFs are a much better bet IMO

[Spreadsheet Ranger]

I want to kill myself when I look at my Dbx portfolio

 

DbxWD - RED

DbxJP - Surprisingly RED

DbxEU - RED

DbxUK - RED

 

DbChin - Soaring Green (Sold it now with this Deutsche Bank's verge of collapse)