The Scottish Widows Income & Growth Plan 1 has breached its downside protection barriers and investo...
The Scottish Widows Income & Growth Plan 1 has breached its downside protection barriers and investors are expected to suffer a reduction in capital when the product matures next year.
The plan proposed to repay 100% of capital unless the value of any of the 30 stocks chosen by Scottish Widows fell by more than 20% from their starting point during the investment term and failed to recover to that level before maturity. Unless the stocks rise dramatically ahead of the maturity date of 13 February 2004, capital will be reduced on a one-for-one basis in line with the value of each stock that has fallen more than 20%.
The basket of stocks has declined by 60% on average from the start of the investment period to 20 February and includes some of the worst performers of recent years. One of these is Marconi plc, which has fallen from £6.15 on 13 February 2001 to 2.2p as at 21 February 2003, a decline of 99.64%. To avoid erosion of investor capital, the shares need to rise by 27,855% before the maturity date.
Another stock in the portfolio is Colt Telecom, which has fallen from £15.20 at the start of the investment period to 41p at 21 February, and must rise by 3,630% before the end of the term.
A spokesperson for Scottish Widows said the product was appropriate for the market conditions in which it was launched and should be held until maturity rather than judged on spot valuations.
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