Structured deposits are cash-based products that provide greater security than structured investments in that the return of capital never depends on the underlying asset performance and Financial Services Compensation Scheme protection will apply to eligible investors if the deposit taker goes bust. However, returns are lower than structured investments, which often put capital at risk depending on index performance.
The structured deposit version of the Meteor plan provides 45 per cent growth at the end of the term provided the index is at or above its initial value and the original capital is returned regardless of index performance. The investment option provides a higher potential return of 65 per cent growth on the same basis, but the original capital is returned only if the index does not fall does not fall by more than 50 per cent by the final day of the term.
The choice of a deposit or investment version makes this plan almost two products in one and unique in the current market. Meteor has also kept it simple, which is one of the reasons that the plan is on the preferred list of the Structured Product Review IFA website.
As at April 13, 2011, other six-year FTSE 100 linked structured investments are available from Meteor, Walker Crips and Morgan Stanley but these are all kick-out products with the ability to mature early, so do not provide a direct comparison.
Morgan Stanley and Barclays Wealth offer six-year FTSE 100 linked deposit plans, but none offers fixed returns payable only at the end of year six. Barclays Wealth Moneybuilder locks in 5 per cent interest a year where the index is at or above its initial value, and pays out the total at maturity, but the maximum potential return is lower than that of the Meteor plan.
Morgan Stanley’s protected growth plan provides a 40 per cent fixed return at the end of year four, but only if the index has risen by at least 40 per cent.