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Jubilee plan rated 9/10

Jubilee Financial Products

Optimized Growth Plan Issue One

Type: Capital-protected bond

Aim: Growth linked to the performance of the FTSE 100 index

Minimum-maximum investment: £3,600-£1m, Isa £7,200

Term: Five years

Return: Three times the growth in the index subject to a cap of 50% of the original investment

Guarantee: Original capital returned in full provided the index does not fall by 50% or more by the final day of the term

Closing date: August 3, 2009

Commission: Initial 3%

Tel: 0844 8920905

The optimized growth plan from Jubilee Financial Products is a FTSE 100 linked plan which has a market timing feature at the start of the five-year term. The initial index level is measured as the lowest daily closing level of the index during the first three months of the term. Investors receive three times the growth in the index, capped at 50 per cent, and will get their original capital back provided the index does not fall by 50 per cent or more.

Discussing the market suitability of the product, Baronworth Investment Services director Colin Jackson says: “Jubilee Financial Products is one of the newest providers to enter the structured products market. This particular product is similar to many others on the market, except for one very important aspect. The strike level is taken at the lowest daily closing level of the index during the first three months of the investment term.”

Jackson says this is the first time he has seen this in a structured product. “ The idea is extremely innovative and should be advantageous to investors.”
There is a risk as to capital with this product, but Jackson notes this is only the case if the index finishes at or below 50 per cent of its initial level by the final day of the term. “This hard protection is far better for investors than what was commonly offered – namely soft protection. Soft protection is when the level of the index is measured during the term of the product and not just at the end.”

Jackson regards the product literature as attractive and easy to understand. “Returns are taxed as a capital gain, as opposed to income, which means that investors who do not utilise their CGT allowance could still get all or part of their returns tax free. This enables investors to use their Isa allowance elsewhere.”

Jackson points out that the counterparty involved in the product is rated A by Standard & Poor’s. “The market participation rate of 300 per cent of the growth in the index, with a maximum pay out of 50 per cent is very acceptable, but any index growth above 300 per cent is not passed on to the investor,” he says.

The IFA commission of initial 3 per cent is seen as in line with the market, but Jackson points out that there is no renewal commission.

“All in all, this could be a popular investment for clients who are looking for growth, as opposed to income, and do not use their CGT allowance.” he says.
There is nothing about the product that Jackson particularly dislikes and he is not aware of any similar products. “This is a bit of a coup for Jubilee,” he says.

Summing up, Jackson says: “This is a well thought out structured product offering attractive returns to investors.”


Suitability to market : Good
Investment Strategy: Good
Adviser remuneration: Good

Overall 9/10



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