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Meteor goes platinum

Meteor Asset Management has introduced the prima platinum plan, a capital-protected bond providing growth linked to the performance of the FTSE 100 and S&P 500 indices for five years.

The plan has an early maturity feature, which provides the potential for the investment to terminate every year throughout the term, depending on the performance of the indices.

If both indices are at or above their initial levels, the product matures at that point. In these circumstances, it will provide growth of 10.5, 21, 31.5, 42 or 52.5 per cent respectively in years one to five. If the index levels do not meet this requirement, the product will roll over to the next year, but if it finishes below its initial value at the end of the term, no growth will be paid.

Investors will receive a full capital return at the end of the term, provided either index does not fall by more than 50 per cent of its initial level during the term. If it does fall by this level, a full capital return will still be paid provided it recovers to at least its initial value by the end of the term. If it does not recover, investors will lose 1 per cent for every 1 per cent fall in the worst performing index. The capital protection is underpinned by Rabobank, which is rated AAA by Standard & Poor’s.

According to the Structured Retail Products adviser website, this is unique in providing growth linked to the FTSE 100 and S&P 500 indices.
Meteor ‘s international income plan is also linked to the same indices but, as its name suggests, has a different objective. There are five other products are linked to more than one index, but these do not provide a good comparison because they include other indices such as the DJ Eurostoxx 50, S&P Bric 40 and Nikkei 225.

Prima platinum growth may be useful for advisers who want diversification within developed markets, potential for early maturity at frequent points and some capital protection.

The early maturity feature reduces the likelihood of the product running full term, so investors will not know at the outset when they are going to get their money back. Capital is potentially at risk, but actual losses will result only when plans run full term and breach the conditions of the capital protection.

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