View more on these topics

Merchant Capital goes with the flow

Structured product provider Merchant Capital has introduced a structured deposit that gives investors a chance to benefit from a fall in the FTSE 100 as well as any growth in the index.

The Merchant Capital deposit plan: bull & bear issue one provide an interest payment calculated at 1 per cent for any 1 per cent rise or fall in the index up a maximum of 40 per cent. If, at maturity, the index has risen or fallen by more than 40 per cent of its initial value, investors will receive only their original capital back.

As a structured deposit, investors’ capital is never at risk from the performance of the index and investors will get a full capital return regardless. The only risk to the return of capital is counterparty risk. In this case, the repayment of the original capital is dependent on the continuing solvency of Barclays Bank.

Defaqto insight analyst for funds Fraser Donaldson points out that there are other plans in the market offering a higher upside and a higher downside protection but index averaging can be used to determine the return.

He says: “At first sight this plan may seem to be too good to be true. The fact that an investor can receive an interest payment based on the rise or fall of the FTSE 100 does make it very appealing. For an Investment of £10,000 the return could be up to £14,000, which within the current market would be a good level of return over a five-year period.

“With an upside and downside up to 40 per cent this plan is worth considering if investors are unsure of the future direction of the FTSE 100 index, as long as their invested capital is not required to be easily accessible.

“If however, investors are particularly bullish on the outlook for the FTSE 100 Index to increase significantly over the next five years then this plan will look less attractive due to the 40 per cent cap.”


Kames targets derivatives and property shares for Aegon fund

Kames Capital is planning to introduce derivatives and property shares to its £968m Aegon UK property fund to increase its liquidity. The fund currently holds around 10 per cent in cash and head of unit-linked property funds Sarah Cockburn says she wants to increase liquid assets to up to 20 per cent of the fund […]

RBS bankers arrested in HMRC tax probe

Four bankers from Royal Bank of Scotland have been arrested in a tax fraud investigation, according to reports. The BBC reports that in addition to the four current RBS employees, one former RBS employee and staff from two other banks have also been arrested. The arrests were made on Wednesday as part of a three […]

Martin Werth: Reality has struck the protection market

Last month I said that after December 21, protection will never be as cheap again. As at February 14, there are 217 working days to uni-sex pricing.  Allowing for 10 days lost for the Olympics, you’re down to 207.  But in reality there’s less time as no quotes or pipeline applications on single sex rates […]

Leading Edge June – Investment panel debate

RLAM’s asset class specialists discuss some of the findings from the panel session at our recent Investment Conference. By Rob Williams, Head of Distribution Welcome to the latest edition of Leading Edge. It has been an eventful six months since the last e-zine. The European Central Bank announced ongoing stimulus measures, while the immigration crisis in Europe threw the […]


News and expert analysis straight to your inbox

Sign up


There is one comment at the moment, we would love to hear your opinion too.

  1. Fair point Fraser. That said, the FTSE is approximately 6,000 at the point of writing, and dividends are 3%. Over 5 years, once I account for the lost dividends the FTSE needs to go up by 40% – 15% = 25% from here. That means a level of 7,500 which is nearly 10% higher than it has ever been. The Merchant plan seems good to me. FYI you can see the latest Merchant capital structured products here

Leave a comment