Prudential this week launches a structured product, offering 60% of the growth of the FTSE 100 with ...
Prudential this week launches a structured product, offering 60% of the growth of the FTSE 100 with capital protection, or an annual income of 7.75%.
Under the income version of the Prudential Growth & Income Plan 4, the product pays 7.75% per year or 0.62% monthly but capital is at risk if the index falls 40% or more.
In this case original investments will be subject to a two for one drop if at the end of the product's life the FTSE is lower than its starting level.
For the growth option 60% of the growth of the FTSE is paid and capital is fully protected whatever happens to the index.
Simon Farrant, product research manager at Towry Law said this feature of the income version would prevent him from recommending it.
He added: 'It contains non-obvious risks which once the client understands what they are tend to say 'no thank you'. I think a double geared downside is very dangerous as there is a real risk that investors' capital can be wiped out.'
The plan invests in a Dublin based investment company so returns are payable gross to investors. The minimum total investment is £7,000 and an initial commission of 4% is payable. There are no explicit charges on the product.
£1bn business since inception
Considered doing so in 2015
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