The bricks & mortar plan 4 is linked to the performance of the Halifax House Price index and will return investors’ original capital after six years regardless of the performance of the index. There is also the potential for growth and returns will vary depending on the index performance.
To calculate the returns, the level of the index for May 2009 is compared with the level on May 2015. If the final index level is higher than the initial value, investors receive 100 per cent of the growth in the index plus a 22.5 per cent bonus. For example, if the index finishes 50 per cent higher than the initial value, investors receive 50 per cent growth plus the 22.5 per cent bonus which means a 72.5 per cent return. If the index remains the same at the end of the term, investors receive only the 22.5 per cent bonus.
If the market falls by up to 22.5 per cent, investors will receive a return equivalent to the 22.5 per cent bonus minus the fall in the index. For example, if the index falls by 10 per cent, investors will receive 12.5 per cent growth. Falls of more than 22.5 per cent mean investors will receive only their original capital at the end of the term.
According to the product database on the Structured Retail Products adviser website, this product is unique. It may appeal to investors who believe house prices are at or near the bottom and who want to benefit from a recovery over the next six years. Previously, the buy-to-let market may have attracted some investors but the market has shrunk and lending criteria have been tightened up, so structured products may be seen as a hassle-free alternative.