View more on these topics

Gilliat links account and structured product

Gilliat Financial Solutions has established a structured product that splits investors’ capital equally between a fixed-rate savings account and guaranteed equity bond held with RBS, the counterparty.

The savings account will provide 5 per cent gross interest after one year, plus the return of the capital invested in that element. The guaranteed equity bond will provide 50 per cent of the growth in the underlying index, with a full capital return on this half of the investment regardless of index performance.

The guaranteed equity bond element is linked to the UK Balanced Sector, RBS Environment Strategy and/or RBS Commodity Strategy indices. Gilliat says investors may choose more than one index to increase diversification, subject to the overall minimum investment of £3,000.

This product could appeal to investors who are looking for an alternative to building society accounts that are unattractive in the low interest rate environment. The interest rate of 5 per cent after one year is higher than available on standalone fixed term deposit accounts, but being part of a longer-term bundled product will not appeal to some people.

The choice of underlying index to provide exposure to different asset classes may be useful but some investors may prefer more familiar indices such as the FTSE 100. The inability to vary the split between the two elements may also be seen as a potential drawback.

Recommended

48

Firms hit out at Sesame move to encrypt emails

Sesame members have hit out at the network over plans to force advisers to encrypt emails containing confidential information, meaning that clients will have to download software in order to open correspondence.

3

FSCS to start paying some structured product claims

The Financial Services Compensation Scheme will now start paying eligible claims that it receives against NDF Administration, Defined Returns Limited and Arc Capital and Income relating to the structured products they sold.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment