Participation Bonds
Participation Bonds - Partbonds
"Participation Bond" means a mortgage bond over immovable property
Are you:
- Recently retired and looking for a secure investment, with high incomes yields with little risk?
- A first-time investor looking for a simple investment solution with high income yields?
A "partbond" is a collective investment scheme under which investor money is pooled to provide loans to property developers. Investors are paid interest monthly by the developers. First mortgage bonds on the various commercial and industrial properties within the portfolio are held by the investors as security.
Participation mortgage bonds, normally considered low-risk investments, are governed by the Collective Investment Schemes Control Act, which also governs the unit trust industry. The Act is administered by the Financial Services Board.
What are the advantages of Participation Bonds?
- Capital protection
- Fixed capital value
- A high fluctuating, market-related interest rate, with interest paid monthly in arrears
- Low or no costs
- No minimum or maximum investment term.
- No fee is payable after 36 months and no fee is charged where the investment forms part of a deceased estate.
Before you invest make sure:
- The Partbond Scheme is governed under the Collective Investment Schemes Control Act.
- The Institution who issues the Participation mortgage bonds is credible – do your homework
Absa Participation Bonds
Absa Participation Bonds has a portfolio of first mortgage property bonds in the commercial and industrial sector and is governed by the Collective Investment Schemes Control Act, which provides capital security and strict rules to protect your investment. There is no charge for making an investment or for withdrawals made after the initial three-year period. Each investor owns an undivided, pro-rata interest in the total portfolio of loans.
Features of investing in the Absa Participation Bond Fund are:
- Competitive market-related interest rates
Current yields between 6.50 and 7.00% (February 2012) - Investment is secure.
- There is no upfront fee for making an investment
- Movements in the market do not affect the value of the invested amount (i.e fixed capital value).
- Interest is paid monthly in arrears. It can also be reinvested in one of Absa Unit trust funds.
- An investment term of 36-months or more is recommended.
- There are no fees after 36-months. For withdrawals within 36-months there is a withdrawal fee of
3%+ VAT on the capital amount withdrawn. (Minimum fee of R300 + VAT). - There no fees where the investment forms part of a deceased estate.
- The investment may be withdrawn by giving 1 calendar months' notice.
- Minimum initial investment and investment balance is R50 000.
- Additional investments of R10 000 or more can be made.
