Type: Growth plan
Aim: Opportunity to make a high competitive return even if the index makes no gains or even falls moderately over the term
Minimum-maximum investment: Direct investment minimum £10,000 up to £500,000
Term: 5 years
Options: Available for both individual and joint applications. Eligible for pension portfolio investment within a Sipp or Ssas
Return: 55% of original investment
Guarantee: Original capital and 55% return will be delivered provided the index does not fall by 50% at any time. If it does and the index is lower at maturity than at the starting date, both capital and the return reduce 1:1 with the index
Closing date: March 27, 2009
Commission: Initial 3%
Tel: 0800 234 6023
This is a five-year plan and both the growth and return of capital are linked to the performance of the FTSE 100 index.
If the index does not fall below the 50 per cent soft protection barrier during the term, investors will receive a maximum return of 55 per cent together with full repayment of capital. If the index falls below 50 per cent of its starting level during the term and does not recover to finish at or above its starting level, the 55 per cent return and capital will be reduced by 1 per cent for every 1 per cent fall in the index.
Baronworth Investment Services director Colin Jackson says this is not an income producing product so is only suitable for investors who are looking for growth. The fact that returns are linked to one index only is a plus point from for Jackson as he dislikes “any product where return of capital is linked to more than one index and the product provider uses an index that is unfamiliar to investors”.
Growth is taxed as a capital gain, which he says makes the plan “an extremely attractive proposition” for investors who do not use all or part of their capital gains tax allowance.
Jackson says a host of other structured products on the market that provide growth only with varying degrees of risk/return. For him, where this product differs from many others, is that both the potential growth and return of capital are affected by the performance of the index. With most other products it is very often the case that the level of growth is not affected by the index but only return of capital. He points out that there is no facility to invest within an Isa wrapper with the Barclays plan.
Jackson believes it “could be considered a good time to invest” as the FTSE 100 is currently at a low level. He says: “This could prove to be an attractive proposition for investors who are looking for an attractive level of growth but are prepared to take a degree of risk with the final level of return and their capital.”
Suitability to market: Average
Investment strategy: Good
Adviser remuneration: Good