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Cater Allen gears up for growth

Cater Allen Private Bank has established a six-year structured product which provides the potential for geared, or enhanced, returns linked to the FTSE 100 index.

The capital guaranteed enhanced growth plan 1 provides a return equivalent to double the growth in the index  at the end of the term, capped at 50 per cent of the original capital.. To calculate the returns, the initial value of the index is compared with the average monthly closing level of the index over the last year of the term.

The plan also provides a full capital return at maturity, regardless of the performance of the index.

Potential downsides include the relatively high minimum investment of £10,000 and a lack of an Isa option, but the beauty of is simplicity. The combination of geared potential returns and full capital protection also makes it stand out from the competition.

Other six-year FTSE-100 linked structured products offering geared returns of double the growth in the index, such as Blue Sky Asset Management’s enhanced growth plan – FTSE 100 Series II  and the Morgan Stanley FTSE best entry growth plan 5, provide a full capital return only if a protection barrier is not breached.

However, these plans have some good features which the Cater Allen plan does not. Blue Sky’s plan provides a minimum return of 25 per cent and a maximum return of 90 cent if the index rises, while the Morgan Stanley plan measures the index growth from the best entry point during the first three months of the term.


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