The prima growth plan 4 is linked to the performance of the FTSE 100 and Nikkei 225 indices for six years, but has the potential to mature every year, depending on the performance of the indices.
Investors will receive 17.5 per cent growth in year one if both indices are at or above their starting values. If this does not happen, the investment will continue until the following year and investors will receive 35 per cent of their original capital on the same basis.
If the indices have fallen at this point, the product will roll over, enabling a 52.5 per cent return to paid in year three, a 70 per cent return in year four, a 87.5 per cent return in year five or a 105 per cent return in year six.
Capital will be returned in full provided neither of the indices fall by more than 50 per cent during the term. If this safety net is breached, the original capital will be reduced by 1 per cent for every 1 per cent that the worst performing index is below its starting value.
According to the Structured Retail Products adviser website, NDF’s Growth Kick Out Plan Aug 07 is a similar product but it provides slightly lower potential returns at 15 per cent, 30 per cent, 45 per cent, 60 per cent, 75 per cent and 90 per cent at each anniversary date, respectively.
Like the Meteor product, 50 per cent soft protection is offered and if this safety net fails, investors will lose 1 per cent of capital for every 1 per cent fall on the same basis as the Meteor product.
However, not all advisers and their clients are fans of products linked to more than one index because the worst performer can drag down the overall returns. Some investors will also require a higher degree of capital protection than both the Meteor or NDF products provide.