etoro - Market gains without risking what you put in

masonic

https://forums.moneysavingexpert.com/discussion/comment/82046578#Comment_82046578

I was basing that on the headline product information on their webpage stating that "At maturity, your capital is guaranteed…Any equity gains are yours to keep". Seems oddly specific for a 50:50 portfolio.

The "income over the portfolio term" further down I did not notice. But in the stats section of the product page it states: "The remaining half of the portfolio is invested in USD-denominated investment-grade corporate bond ETFs, with maturities aligned to the end of 2028. This component generates steady income and supports the portfolio’s capital protection objective." I take that to mean the bonds will be used towards making good any losses, rather than putting it directly into the hands of the investors. That doesn't necessarily mean it won't be paid to investors if there is no loss, but I am suspicious.

I had a good look around for a precise description of how this product works and exactly what returns investors are entitled to above the guarantee, but found nothing definitive. The money to fund the capital guarantee will be coming from somewhere. The fact this is not made clear means the product does not pass the sniff test for me.

If the guarantee is in effect unfunded beyond the income from the bonds, then that creates an existential risk for eToro if there happens to be a major crash coinciding with the redemption of this product.

Edit: actually, maybe this holds the key to the last point: "Before the strategy concludes, the portfolio may switch the ETFs of the fixed-income component to short-duration Treasury ETFs. In addition, the portfolio may be rebalanced at eToro’s discretion, depending on market conditions." - essentially they can pull the plug and move to ultra-safe if things start to go pear-shaped, with the buffer of the income generated from the bond holdings and any equity dividends. It will be in their interests to exit the market early to minimise their losses, even if it means a poorer outcome for investors over the full term.

efunc

Crickey! This other one actually looks quite compelling as a 4 year structured deposit plan:

https://www.wcgplc.co.uk/StructuredInvestments/Offer/SAN141

• Potential return of 24.50% payable on maturity
• Minimum return of 12.25% payable on maturity

So… over 4 years equivalent of about 6.13% a year interest if the FTSE100 go up, or 3.1% if it goes down. Atually quite decent odds and would not suffer a total wipeout in the worse case scenario. Any thoughts?

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82046457#Comment_82046457

At its heart essentially this scheme is a bet upon what level the FTSE 100 will finish at in 3 years time.

The protection element lies with Santander so assuming you lose the 'bet' and the FTSE finishes more than 90% below its July 2026 index level , Santander is the backstop to ensure you at least get back your intial stake no mattter what happens to the issuer ( Walker Crips) in the interim.

Whether a potential total 18.50% ( non guaranteed) return is attractive compared to say a guranteed 4.65% annual return for 3 years from say NSI growth bonds , only you can be the judge.

In my view a product like this is more akin to a bet, rather than a measured investment opportunity but with the security of getting your money back if you lose the bet.

Some other points to note:

1. Outside a SIPP or ISA, the investment return if achieved, is liable to income tax not CGT.
2. There are small exit charges if needing to encash prior to maturity
3. If you have any other savings with Santander, this product utilises part of your £120k fscs deposits protection.

efunc

https://forums.moneysavingexpert.com/discussion/comment/82046640#Comment_82046640

Yes, that's how I read it. But over a 3 year period, the index rising, at least somewhat, seems to be not such a wild expectation. It may dip for a prolonged period, but just recover enough not to fall below 90% during this time. It is not guaranteed of course, but seems reasonable. In which case an investor would enjoy 6.15% interest a year, beating most savings accounts and bonds. On the other hand, if I had such faith in the FTSE I could just invest in a tracker and potentially enjoy about 7% growth a year if the last few years is anything to go by; and I would have the flexibility to assess market conditions and cash in at any time.

I'm undecided. But now the 'Walker Crips UK Fixed Growth Deposit Plan (SAN141)' is starting to look quite interesting to me.

masonic

https://forums.moneysavingexpert.com/discussion/comment/82046637#Comment_82046637

The expected dividends from the FTSE100 over the 4 years would be around the 12% mark. You essentially get those as part of your return.

If the FTSE100 falls over the 4 years (25% chance) that's essentially all you get plus your money back. If the FTSE100 grows over 4 years (75% chance) you get 12.25% extra.

The house wins if the FTSE100 goes up by a lot, as you are selling this upside. This will be a >50% probability if they know what they are doing.

Historically the FTSE100 has returned around 6% per year on average excluding dividends. Your upside is capped at around 4%. You may consider that a fair trade depending on your opinion of how likely there is to be a loss period over the next 4 years.

Remember to take inflation into account when weighing this up. There is a risk that asset prices and interest rates could be lifted while this product would deliver a capped return. Though it looks like there is an early exit route.

efunc

I've decided I'd like to invest in the structured deposit 'UK Fixed Growth Deposit Plan (SAN141)' alongside a slightly smaller direct investment into the FTSE100, some bonds and EM equities, Global ex US, etc within my Interactive Investor SIPP.

The problem I have is that the application must be made by 7/7/2026 and through a Financial Advisor. I don't currently have one and some that I've looked at require consultation and multiple sessions taking weeks and then charging ongoing fees. Can anyone suggest a simple fixed fee IFA that would be able to submit the application for me in one session?

masonic

https://forums.moneysavingexpert.com/discussion/comment/82050616#Comment_82050616

A quick search revealed the following website that might be of interest: https://www.bestpricefs.co.uk/structured-products/11112024-uk-fixed-growth-deposit-plan/

FCA register: register.fca.org.uk/s/firm?id=001b000000OHK6aAAH

I know nothing else about this firm, but they are offering focused advice at 1.5% (min £300). I'd say that was a bit steep for larger investments personally, but there would be no ongoing charge, so perhaps it is fair.

DYOR

efunc

Thanks for that, it's a great start so I'll follow up on the lead. I'm considering around £80-100k into this for now, so a one off fixed fee is always preferable to percentage. I've never understood the justification of a % cut since the time required to submit a form is the same whether the client is investing £10,000 or £1,000,000.

efunc

0.5%, min £75 here:

https://bestadvicewealthmanagement.com/walker-crips/

Seems more reasonable, thanks for the lead

masonic

https://forums.moneysavingexpert.com/discussion/comment/82050647#Comment_82050647

Unless I'm missing something, SAN141 has a "Yes" in the Advised Only column, and they say above "Our fees are just 0.5% of the value of the invested capital (minimum £75) for non-advised investments and 1.5% for advised investments (minimum £300)."

But it is at least good to see this pricing structure is matched across two supposedly low cost firms.