Sequoia Specialist Investments allows investors to access investment strategies and structures not readily available to individual investors in Australia. These types of investments are often known as “structured products” and are designed to facilitate attractive risk return objectives.

The Units in India Series 1 (“Series 1”) offer investors the ability to gain 100% leveraged exposure to the performance of the Barclays India SG ER Tracker Index. This index references a futures contract linked to the performance of the top 50 equity stocks listed on the National Stock Exchange of India.

A Summary of the key features:

Barclays India SG ER Tracker Index

The Barclays India SG ER Tracker Index (“BXIIINER Index”) is an excess returns (ER) Index that invests in and rolls the first-nearby USD-denominated NIFTY 50 futures (Bloomberg ticker: “JGSA Index”). These futures are traded on the NSE International Exchange IFSC Limited (NSE IX).

The BXIIINER Index aims to track the excess returns performance of NIFTY 50 Index, a widely-used benchmark for the Indian equity market, reflective of the performance of the top 50 equity stocks listed on the National Stock Exchange of India (NSE), selected based on their free-float market capitalisation and liquidity.

The difference between an excess returns futures Index (unfunded) and the NIFTY 50 Index (funded) arises from funding rates, dividends and the implied repo rate in the futures market, which is driven by demand-supply and makes the futures trade at a premium or discount to their theoretical value.

On a 5 year historical lookback basis, the annualised performance of BXIIINER is approximately 6% lower than NIFTY 50 Index, in line with average benchmark India funding rates in the same period. Please note this difference can narrow or widen, depending on the drivers above.

Investors should be aware that the interest cost on a limited recourse loan provided for an investment linked directly to the NIFTY 50 (i.e. if Series 1 was linked directly to the NIFTY 50) would be approximately 13.1% p.a. which is 4.5% p.a. higher than the interest payable under Sequoia India Series 1 (linked to the Barclays India SG ER Tracker Index). This is because the hedge cost obtained from the Hedge Counterparty is significantly lower due to the fact that Series 1 is referencing an index tracking NIFTY 50 futures rather than the NIFTY 50 index itself. As such, Series 1 is a lot more cost efficient for end investors.

More information on Sequoia India Series 1 can be obtained by downloading the PDS.