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Incapital offers kick out potential from year two

Incapital Europe has introduced a six-year structured product with the potential to kick out every year from year two, depending on the performance of the FTSE 100 and S&P 500 indices.

The Incapital Europe dual index kick out plan series 20 has the potential to provide 10.5 per cent growth for each year the product remains invested, so that the first opportunity for a kick-out in year two provides a 21 per cent return plus the original capital. A kick-out will occur if both indices are at or above their initial values and if this does not happen, the product will roll over to the next year on the same basis throughout the term.

The maximum growth potential is 63 per cent, which will be paid if both indices are at or above their initial values only in the final year of the term. If the indices are never at or above their initial values during the term, investors will receive no growth but they will receive their original capital unless one of the indices falls by more than 50 per cent by the final date of the term.

If the 50 per cent capital protection barrier is breached, investors will lose 1 per cent of their original capital for each 1 per cent fall that the worst performing index is below its initial value.

Meteor has an alternative six-year kick out plan linked to the FTSE 100 and S&P 500, the step down defensive kick out plan. The main differences from the Incapital product are that it can kick out from year one and that the index levels needed to trigger a kick out reduce by 10 per cent each year, starting from 100 per cent of the initial value in year one and falling to 50 per cent in year six. This feature of the Meteor plan may increase the likelihood of it kicking out earlier than the Incapital product, but the potential returns are lower at 8.5 per cent for each year the plan remains invested.

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