View more on these topics

A Premier league plan

Premier Fund Managers has introduced the European growth plan, a capital-protected bond that could mature earlier than its six-year term.

The bond is linked to the performance of the Dow Jones Eurostoxx 50 index, which is made up of 50 of the biggest companies in European countries using the euro currency.

The plan has a six-year term but has the potential to mature early during each anniversary, depending on the performance of the index. If the index level is at or above its starting level at the end of year one, the product will mature with a return of 10 per cent of the original investment. If this does not happen, the product will continue until the next year. Returns of 20 per cent, 30 per cent, 40 per cent, 50 per cent and 60 per cent are payable at each anniversary date respectively.

Investors will also receive a full capital return provided the index does not fall by more than 50 per cent without recovering to at least its starting level by maturity. If this safety net is breached, investors will lose 1 per cent of their capital for every 1 per cent drop in the index.

According to the Structured Retail Products adviser website, this product is unique in that it is linked solely to the Dow Jones Eurostoxx 50 index over six years. Other products that are currently available are linked to a basket of indices that include the Dow Jones Eurostoxx 50 for a term of three years and six months to five years and six months.

The only other products linked solely to the index are Natwest International’s quartet guaranteed stockmarket bond 4 and Standard Bank Offshore’s structured growth solutions European growth accelerator. However, as offshore products with shorter investment terms than Premier’s, they do not provide a good comparison.

As a unique product, Premier’s plan may find a place among investors who are looking for capital protected exposure to Europe excluding the UK. However, it does not offer full protection as it depends on the 50 per cent barrier, which could put off investors at the very cautious end of the spectrum.

While the potential for early maturity could be attractive, the product may be unsuitable for investors who are not willing to tie their money up for the full six years, as early maturity is not a certainty.

Recommended

Wealth of knowledge

Tax Simon Hildrey explains why it is not only the wealthy who can benefit from non-domiciled status in the UK.

Trio of fund managers hit the road

JP Morgan, New Star and Schroders are jointly hosting regional roadshows on equities, bonds and property throughout June. The presentations will last around two hours and will earn advisers CPD points. They can register by calling 020 7 225 6092 or emailing rsvp@jointroadshows.com JP Morgan managing director for global equities and client portfolio manager John […]

Harrison to analyse Aegon performance

Aegon Asset Management has recruited Anne Harrison from Fidelity for the newly created role of head of performance.The move follows the appointment of three other business heads, with Nigel Loweth covering institutional business, Scott Jamieson structured products and Innes McKeand equities.Harrison will lead the performance analysis team and focus on ensuring the firms’ performance data […]

A guide to automatic re-enrolment

Since the introduction of auto-enrolment in 2012, it has been a popular topic in the press. Recent media focus has been geared towards small and micro employers; however attention is set to return to the UK’s largest businesses as they prepare for re-enrolment. Johnson Fleming has produced a useful guide that provides essential information to help you […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment