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Constructive growth from Jubilee

Jubilee Financial Products – The Real Growth Plan

Type: Capital-protected bond

Aim: Growth linked to the performance of the FTSE 100 index and UK Retail Prices index

Minimum-maximum investment: £10,000-£1m, Isa £10,200

Term: Six years

Return: The greater of 100% of the growth in the FTSE 100 index or 100% of the growth in the UK Retail Prices index

Guarantee: Original capital returned in full at the end of the term provided the equity index does no fall by 50% or more without returning to at least its initial value

Closing date: May 28, 2010, May 7, 2010 for Isa transfers

Commission: Initial 3%

Tel: 0844 892 0905

This structured product from Jubilee Financial Products is linked to the performance of the FTSE 100 index and the UK Retail Prices index for a six-year term.

Discussing the ways in which this product could be useful to IFAs and their clients, Baronworth Investment Services director Colin Jackson says: “This is an interesting six- year growth product where the return is linked to the FTSE 100 Index and the UK Retail Price Index.  The plan offers 100 per cent participation in the growth of the best performing index.  In addition, the risk to capital is linked only to the FTSE 100 Index so the plan will still pay the return of the UK Retail Price Index even if capital is reduced by a fall in the FTSE 100 Index.”

Jackson points out that investors’ capital is at risk at maturity. “ If the FTSE 100 Index closes at any time during the investment term at a level at or below 50 per cent of the initial index level and the final index level is lower than the initial index level, then capital will be reduced by the percentage amount the final index level is lower than the initial index level.”

He adds that in this scenario, if the growth in the UK RPI is less than the fall in the FTSE 100 the total amount of capital returned may be less than the amount invested. “ If the FTSE 100 Index never closes during the investment term at a level at or below 50 per cent of its initial index level or if the final index level is at or above the initial index level then there will be 100 per cent return of capital,” says Jackson.

Jackson is not normally a supporter of plans that link to more than one index. “However, in this case, although linked to two Indices, I believe the plan is extremely attractive due to the way that it is constructed,” he says.

The product literature supporting the plan is regarded by Jackson as well produced and easy to understand. He also points out that the counterparty is Abbey National Treasury Services, a subsidiary of and guaranteed by Santander UK, which is rated AA by Standard & Poor’s. Another positive for Jackson is that the return on maturity will be subject to capital gains tax as opposed to income tax. “As most people do not utilise their CGT exemption, this means that investors could receive all or part of their returns tax free without having to use their Isa allowance which could be used elsewhere.” He feels that the adviser remuneration of initial 3 per cent is in line with the market.  

There is nothing in particular that Jackson dislikes about the product and as far as he is aware, there are currently no other products on the market that offer similar terms.

Summing up, Jackson says: “This is the first time that I have seen this type of Plan come to the market.  It could be an attractive proposition for investors who are looking for growth, do not utilise their CGT exemption and are prepared to take a degree of risk with their capital.”


Suitability to market: Good

Investment strategy: Good

Adviser remuneration: Good

Overall 8/10


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