Advisers says the Barclays Stockbrokers five-year range 8 income bond could be too complex for many retail investors.
The bond, which is underwritten by Societe Generale, aims for annual income of 8 per cent but the full income will only be paid if the FTSE 100 does not rise by more than 21 per cent or fall by more than 23 per cent from the strike price. For each day the FTSE is outside those parameters, the income accrued will not be paid on that trading day.
If, at maturity, the FTSE 100 is 40 per cent or more below initial level, investors will lose a corresponding percentage of capital.
Lowes Financial Planning managing director Ian Lowes says: “I am not fond of income plans that do not guarantee income. Retail investors must recognise both capital and income is at risk with this product.”
Michael Philips proprietor Michael Both says: “The client does not have a hope in hell of understanding the risk.”
A Barclays Stockbrokers spokesman says: “The Societe Generale range 8 income product was made available for our self-directed brokerage clients who have an uncertain view of the FTSE 100.”