This structured deposit is linked to the performance of the FTSE 100 for five years but has the potential to mature earlier if the index meets certain criteria.
There are two kick-out options. Option one has potential kick-out points every year based on the five-day average closing level of the index is above the initial value. It provides growth of 5 per cent for each year the plan is invested but there will be no growth if the five-day average closing level of the index is never above its initial value. In this case investors will leave the plan with only their original capital after five years.
Option two provides slightly higher returns at 5.25 per cent for each year the plan is invested because kick-out options are provided only in the last three years of the term. Again, investors will receive only their original capital back after five years if the five-day average closing level of the index is never above its initial value.
As at June 15, 2011 it was difficult to find other five-year FTSE 100 structured deposits with kick-out options so some investors may welcome Investec’s two options in one product. However, other investors may think that having two sets of kick-out options complicates the product.