View more on these topics

Abbey follows path to US

Abbey’s US equity bond is linked to the performance of the S&P 500 index over a five-year term.

The bond provides 100 per cent of the growth in the index at the end of the term and investors also recieve a full capital return regardless of the performance of the index.

To calculate the returns, the closing level of the index is recorded at the start of the term and compared with an average of the closing levels of the index during the final year of the term.

The difference between the two figures indicates the final return investors will receive on top of their original capital.

According to the product database on the Structured Retail Products adviser website, Abbey’s offering is unique as no other structured products are linked purely to the US stockmarket. Some products have exposure to the US by including the S&P 500 in a global basket of indices, but these do not provide a good comparison for the Abbey bond because the final returns are also influenced by other stockmarkets.

The S&P 500 is notoriously difficult for active fund managers to outperform so some investors may see this product as an alternative means of getting US exposure into their portfolios, with the added bonus of capital protection. With no other structured product providers exploring this space, Abbey may fill a gap in the market to meet demand for US exposure with capital protection among retail investors.

Although investors do not risk losing their capital if the stockmarket underperforms, there is a risk that they could end up with nothing to show for five years of investment but their original capital if the index does not grow. This is not bad for a worst-case scenario, but inflation could erode the value of the original investment in real terms by the end of the investment period.


Site rapped over ‘cheap’ cancer cover

Price comparison website has come under fire for listing Virgin Money’s cancer cover as one of the cheapest joint life and critical-illness policies.Highclere Financial Services partner Alan Lakey says people searching for cheap joint cover might buy Virgin’s policy assuming it insures against a range of critical illnesses, not just cancer.Virgin’s product only pays […]

Where next for the price of oil?

Having stabilised at around $65 a barrel, many investors are questioning if the price of oil will rise, and when. Richard Hulf provides his view. Richard Hulf, manager of the Artemis Global Energy Fund, sets out his thoughts about how the oil price may move through the next six months. At the start of the […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm