Morgan Stanley has launched the second tranche of its FTSE Defensive Gilt-Backed Growth Plan, a structured product linked to the performance of the FTSE 100.
The plan buys British government bonds which have a AAA Standard & Poor’s rating and uses a segregated account to secure the returns from its use of derivatives.
However, the second tranche will not offer the same returns as the first, the group says, because gilt yields have become more constrained.
The plan pays a pre-defined return of 7.25% each year as long as the FTSE 100 has not fallen more than 10% from its initial level every year, for a maximum of three years. The product includes a 50% soft protection barrier, observed at maturity.
Morgan Stanley says the product’s structure mitigates credit risk, which has made it popular among financial advisers. The plan is its best selling structured product since the firm launched its retail offering in 2003.
The product is available for direct and Isa investment, with a £3,000 minimum investment.
Morgan Stanley launches FTSE 100 product