Henderson Global Investors has launched its first structured product, the FTSE 100 Income or Growth ...
Henderson Global Investors has launched its first structured product, the FTSE 100 Income or Growth Plan, which guarantees the return on investment but does not secure the initial capital.
The Plan gives investors the option to buy a fixed income of 6.5% per annum or a fixed monthly income of 0.52% for 5 years, or a growth option of 35% return at the end of the 5 year term, which can be held in an ISA, directly or via a PEP/ISA transfer.
But although the investment outcome is secure, the initial capital is only returned if one of two conditions is met: The FTSE 100 Index never falls by more than 30% from the Start Value (official closing value on 3 January 2003) during the final 2 years of the plan; or, if the FTSE 100 falls by more than 30% in the final 2 years of the plan, the Final Value (closing value on 3 January 2008) is greater than the Start Value.
Simon Ellis, Head of UK Retail at Henderson says, "If we take for example that the Start Value is 4000, the FTSE 100 would have to go below 2800 to break the protection barrier." The IFAs who have shown interest in this product forecast the FTSE to be above this level at its closing value, adds Ellis.
Once the initial capital has met one of the conditions the value lost is calculated on a one-to-one basis with the performance of the FTSE 100 Index.
The Plan will invest in medium-term notes, such as 5 – 10 year bonds, whose performance is linked to the FTSE 100 Index. The Manager "will endeavour" to purchase notes from issuers with AA Standard & Poor's credit ratings.
IFAs can expect a 3% commission with no trail.
To ensure creditworthiness assessments compliant
Avoid broad-brush strokes
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