Type: Structured deposit
Aim: Growth linked to the performance of the FTSE 100 index
Minimum-maximum investment: £5,640-£1m, Isa £5,640
Term: Six years
Return: 6.5% growth locked in each year provided index is at or above its initial value giving maximum growth of 39%
Protection: Original capital returned in full at the end of the term regardless of the performance of the index
Closing date: July 18, 2012, July 11, 2012 for Isa transfers
Commission: Initial 3%
Tel: 0500 009462
This structured deposit plan from Cater Allen locks in 6.5 per growth for each year that the FTSE 100 is at or above its initial value over a six-year term. This provides maximum potential growth of 39 per cent, while investors’ capital will be returned in full at the end of the term regardless of the performance of the index.
Discussing the market suitability of the plan, Baronworth Investment Services director Colin Jackson says: “This is a six-year deposit plan linked to the FTSE 100 index. It would be particularly attractive to cautious investors who are looking for the prospect of an attractive return at the end of six years, coupled with capital protection subject to the counterparty.
“In terms of structured products, this is the simple end of the spectrum helped by the fact that the literature is well written and easy to understand.”
Jackson notes that the income is linked each year to the level of the FTSE 100 index, with a potential return of 39 per cent paid out at the end of the six-year term. This equates to 6.5 per cent a year not compounded, along with return of capital subject to counterparty risk.
“On the subject of the counterparty, all deposits are held with Cater Allen Private Bank and are fully and unconditionally guaranteed by Santander UK which is rated A by Standard & Poor’s,” says Jackson. He points out that the plan is open to direct investment, cash Isas and cash Isa transfers. It is also available to corporate investors, trustees and charities and for Sipp and SASS investments.
Jackson adds that the plan’s initial commission of 3 per cent is in line with the market.
Turning to the potential drawbacks of the plan Jackson says there is nothing in the plan that he does not particularly like. Considering the main competition the plan is likely to face, Jackson says: “There are one or two other products on the market that offer an attractive potential annual return subject to the performance of an index.”
Summing up Jackson says: “In the current economic climate, there are many investors who are looking for capital protection. This plan offers that together with the potential of an attractive return at the end of the plan term.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Good