This product was designed to provide investors with a return above their original capital in both rising and falling markets. It is linked to the FTSE 100 index for a term of six years. If the index rises over the term, investors will receive 100 per cent of this growth while if it falls investors will receive a return equivalent to this fall, capped at 45 per cent. This is 5 per cent less than the previous issue in June.
Investors will receive only their original capital back in two circumstances – if the final index level is the same as the starting level, or if the index falls by more than 50 per cent but does not recover to at least its starting level by the end of the term.
The bull and bear concept could be regarded as the equivalent of an each way bet and may have appeal for cautious investors who are not sure about the direction of the stockmarket over the next six years. The Arc product is unique according to the Structured Retail Products adviser website and it may also attract interest due to its full capital protection.
However, the level of return if the index grows rather than falls is not as attractive as some FTSE 100 linked products that do not link returns to falls as well as growth in the index.