Structured Products - Kick Out Plans

triplea35

Any views on these?

I can get a reasonable return on a 5yr plan ( 8% + tax free) as long is the FTSE is higher than at the start on any of the aniversary dates and if it is the plan matures and pays out

At the end of the term if the FTSE is lower than at the start then I only get the capital back and if it is more than 50% lower then there would be a very serious erosion of capital.

However despite having a cautious attitude to risk I believe that it would be unlikely that the plan did not mature on one of the earlier anivesary dates, and if it didnt the chance that it would be 50% lower, ie around 2500 to be extremely unlikely.

I fully understand the terms of the plan just wondered what other views are that regarding the FTSE 100 in the next 5 years.

Thanks

Lokolo

This sounds like a GEB, its pretty poor at that.

There are better out there.

For example:
http://www.ybs.co.uk/investment/gia/gia-tracked-growth.html?int_cmp=investments_gia_tracked3

Upto 60% growth, with a minimum of 11.25%. 5 years.

triplea35

Do you think so? I have looked at many including the YBS but its all in the 'details' 60% would only be possible if the FTSE continually rose over the next 5 years without peaks and troughs and relies on the FTSE being higher on the 5th aniversay. I think the kick out plan would mature far earlier and involve less risk.

Cheers

Lokolo

http://uk.finance.yahoo.com/echarts?s=^FTSE#chart1:symbol=^ftse;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

Look at that. If you think its going to continue upward for next 5 years then go for it.

Any reason why you want to pick this rather than a FTSE tracker?

(edit: copy and paste)

Welshy213

If you want a kickout plan, this one looked quite good.
Investec FTSE 100 Enhanced Kick Out Plan 6

This one pays 12.5 PA and is the same as the Barclays as from what I can see.

Lokolo

welshy213 wrote: »

If you want a kickout plan, this one looked quite good.
Investec FTSE 100 Enhanced Kick Out Plan 6

This one pays 12.5 PA and is the same as the Barclays as from what I can see.

I like the way on the top of the page it says "For Financial Advisor Use Only" haha.

Welshy213

Lokolo wrote: »

I like the way on the top of the page it says "For Financial Advisor Use Only" haha.

I didn't even notice that, it was just the first link that came up in google, I was one of the products i was looking at myself.

triplea35

The public brochure:
http://www.investecstructuredproducts.com/pdf/Investec_EKOP6_Bro_11.pdf
Either way both products can be enhanced by buying through a non advice internet IFA such as Moneyworld where you get a 2.5% commission refund.

Lokolo, I ilke the idea of this rather than a tracker as it has a guaranteed return of 8%+ pa tax free even out of an ISA, set against my capital gains allowance, and is only dependent on the FTSE being one point higher than the start date on any one of five anivesary dates. I think this is very likely, whereas a tracker can be very variable and although maybe has potential for higher rises it could be difficult to decide when to take profits.
Does that make sense?

triplea35

Welshy. I have compared the Barclays plan to the Investec Product. The 12.5% rate from Investec is certainly more appealling than the Barclays product but there are two noticeable differences.
1. Investec refers to a barrier breach at anytime during the life of the plan, ie the FTSe falls below 50% of the intial level, whereas Barclays only refers to it falling below 50% on the date of maturity.
2. Both plans refer to fixed return growth if the plans mature at aniversary dates of years 1 2 3 & 4 ie Barclays 8% 16% 24% 32% and Barclays at year 5 at 40%. Investec states return of 12.5% 25% 37.5% & 50% but for final maturity of the Plan at Year 5 suddenly refers to 120% of any FTSE growth. If by chance the plan hasnt matured and kicked out in the earlier years then the FTSE has continued to remain below the intial FTSE level. If it was to improve in the final year the rise could be small, ie 10% and if so the return would be 120% of that making 12% for a 5 year investment.
Hope I am reading/interpreting these correctly as I am by no means a financial expert and have only strated to look at structured products in the last few days

wychwoods

triplea35 wrote: »

The public brochure:
...investecstructuredproducts FTSE 100 Enhanced Kick-Out Plan 6 ...
Either way both products can be enhanced by buying through a non advice internet IFA such as Moneyworld where you get a 2.5% commission refund.

Be nice - this is my first post to this forum!

Hmmm, unfortunately I'm rather a Jonah with investments so I should warn you all that this Investec product does look very appealing to me! Thanks for highlighting it, triplea35.

The chance of the FTSE staying above water over the next year seems pretty good to me, in which case the plan matures and you can walk away with 12.5%.:D

The one part of Investec's brochure that did worry me :eek: was the prospect of them becoming insolvent once the Plan has started. The FSCS protection does not cover the investment - can anyone comment on that? Is it likely? Is it true?

dunstonh

The one part of Investec's brochure that did worry me :eek: was the prospect of them becoming insolvent once the Plan has started. The FSCS protection does not cover the investment - can anyone comment on that? Is it likely? Is it true?

This is correct. It is why the terms offered by the riskier ones are higher than those offered by the safer ones (in terms of underlying assets).

This is why you shouldnt look at just the rates when choosing to buy.