The six-year capital accumulator auto-call offers 22.5 per cent fixed growth potential in year two with an automatic early closure feature if the FTSE 100 and S&P 500 indices are at or above their initial levels after two years. Protection is provided unless the indicies fall by more than 50 per cent during the investment term. AAA-rated Rabobank is the counterparty.
The six-year absolute return plan two offers an annual return of 12 per if the FTSE is at or above its initial level. The plan will deliver returns with a minimum of 42.5 per cent built in, and a maximum of 72 per cent (based on 12 per cent per year). The plan provides protection unless the FTSE falls 50 per cent at maturity in 2016. The barrier is only monitored at maturity. The plan is backed by A+-rated Societe Generale.
The average amount invested in the first absolute return plan exceeded £100,000 with approximately 70 per cent of monies invested via pensions wrappers.
Minimum investment for both new plans is £10,000 for direct Investment or £7,200 for Isas and Isa transfers. Investors aged over 50 can invest £10,200. The plans can be accessed through pension schemes, including Sipp and Ssas and are also available for corporate investment. Returns are taxed as capital gains.
Chief executive Chris Taylor says: “Both of the newly launched plans offer wealth managers and investors innovative solutions at this time, and compelling alternatives and/or complements to traditional investment funds, including actively managed absolute return funds.
“The investment exposure to the FTSE 100 on the absolute return is achieved ‘synthetically’ through options so there is no active management risk, as there is with mutual fund absolute return funds. This is quite a significant USP, and an opportunity to use the strategy as a core holding alternative or complement to other absolute return strategies.
“Both plans present strategies for an uncertain investment climate, that mitigate risk whilst maximising the likelihood of solid investment returns, requiring no market growth.’’