This structured products has a six-year term and provides annual income of 6.25 per cent or monthly income of 0.51 per cent throughout the term. The return of capital at the end of the term depends on the performance of the FTSE 100 index.
A full capital return is paid provided the index does not fall by more than 50 per cent during the term and fails to recover to at least its initial value by the final day of the term. If this safety net is breached, investors will lose 1 per cent of their original investment for each 1 per cent fall in the index.
According to the Structured Retail Products adviser website, option two of Gilliat Financial Solutions’ income series issue 2 is a FTSE 100 linked income plan which has a term of six years and two weeks. This product offers a fixed income of 2 per cent a year plus a potential bonus of 5.72 that is dependent on the index performance. This bonus brings the maximum income potential up to 7.72 per cent a year, which is higher than the Barclays Wealth plan.
However, the Gilliat product has no monthly income option. It will also protect only 90 per cent of the original capital if the index falls by 10 to 50 per cent during the term, whereas the Barclays Wealth product would provide 100 per cent capital protection in this situation.
Choosing between the products would depend on whether investors prefer the Gilliat product’s potential for higher returns or the greater capital protection of the Barclays product.