Structured Products - Kick Out Plans

Jonbvn

Good article on structured investments on the Motley Fool.

Bear in mind that some structured investments were backed by Lehman Bros, and look what happened to them!!!

wychwoods

Jonbvn wrote: »

Bear in mind that some structured investments were backed by Lehman Bros, and look what happened to them!!!

Doesn't the fact that the world has now woken up to sub-prime mortgages and investments based on thin air mean that today's new products are much more secure? Also, the likes of Lehmans have been taken out of the system.

Am I being unrealistic?

Reaper

At least the Investec one is simple in that either Investec stays solvent in which case you get your money, or they go bust in which case you lose it.

Most structured products use a 3rd party for the guarantee of the capital and that 3rd party (which the investor might not even be aware of) has to stay solvent too. That was the problem with Lehmans who were the hidden back end of many schemes.

I must say I'm quite tempted to suggest Mrs Reaper put a small part of her savings with Investec. She's looking for something with a little risk in exchange for better returns and is not interested in the work involved in monitoring standard investments. Unless there are any IFA only ones I don't know about that are better?

The other option I was considering was banking Tier 1 securites or Preference Shares, but they may have to be held for longer to make a profit if payouts were to be withheld.

Decisions, decisions.

Jonbvn

wychwoods wrote: »

Doesn't the fact that the world has now woken up to sub-prime mortgages and investments based on thin air mean that today's new products are much more secure? Also, the likes of Lehmans have been taken out of the system.

Am I being unrealistic?

That's an interesting question, I wish I knew the answer to!

wychwoods

The chance of the FTSE ending above October's value in a year's time and Investec not going bust in that same period must be reasonable.

I'm thinking the odds with this Investec product are quite good.

Can anyone comment on Investec's reputation and capitalisation?

Reaper

wychwoods wrote: »

The chance of the FTSE ending above October's value in a year's time and Investec not going bust in that same period must be reasonable.

I'm thinking the odds with this Investec product are quite good.

Can anyone comment on Investec's reputation and capitalisation?

I've been looking at their rating and it's not that good to be honest.

You can see their various ratings on their web site here:
http://www.investec.com/en_gb/#home/investor_relations/financials___forcasts/credit_rating.html

It's a confusing table but I think an important one is the Baa3 rating which means it is not far off "junk" status.

I makes me hesitant to go ahead without an FSCS safety net.

dunstonh

Personally, if I was looking at structured products right now, AA- would be the minimum.

whiteflag_3

dunstonh wrote: »

Personally, if I was looking at structured products right now, AA- would be the minimum.

Something like this?
http://www.barclayswealthprotectedinvestments.com/products/ftse-generator-bond

Sceptic001

whiteflag wrote: »

Something like this?
http://www.barclayswealthprotectedinvestments.com/products/ftse-generator-bond

What a strange product. Why would anyone want to risk getting no return over six years in the hope of getting 6 lots of uncompounded 6% when you can get a guaranteed fixed rate for five years at over 5% compounded? Am I missing something?

wychwoods

Reaper wrote: »

I've been looking at their rating [investec's] and it's not that good to be honest.
It's a confusing table but I think an important one is the Baa3 rating which means it is not far off "junk" status.

I said I was a Jonah when it comes to investments! They were probably AAA+ before I looked at them!