View more on these topics

Morgan Stanley IQ gives investors a boost

Morgan Stanley IQ describes its FTSE booster plan as the first structured product of its type to be available in the UK retail market.

The six-year FTSE 100 linked plan provides positive returns if the FTSE 100 index falls by up to 50 per cent and also provides a cushion against bigger falls. Higher market volatility has made the pricing environment conducive to offering this product but the company does not know if future tranches will be possible, as pricing can change quickly.

Investors receive a fixed return of 60 per cent growth, plus a full capital return, provided the FTSE 100 index does not fall by more than 20 per cent over the term.

If the index does fall by more than 20 per cent, the plan’s booster feature will kick in. Instead of focusing on how much the index has fallen in percentage terms, the booster feature calculates index performance on the final value of the index relative to its initial value. This figure is then doubled to provide a total return. For example, if the index falls by 25 per cent, the final level of the index would be 75 per cent of its initial value. The booster feature would calculate the return as two times 75 per cent, which is 150 per cent. This would represent a full capital return plus 50 per cent growth.

When the index falls by more than 50 per cent, the booster feature will provide capital protection. For example, if the index falls by 60 per cent, the final value of the index will be 40 per cent of its initial value. Using the booster feature, this would produce an 80 per cent return and investors would lose 20 per cent of their original capital.

Many structured products reduce capital by 1 per cent for each 1 per cent fall in the index if a 50 per cent capital protection barrier is breached. These products may have the potential for higher maximum returns but would lose 60 per cent of investors’ capital if the index fell by 60 per cent.

Recommended

Credit Suisse fined £6m over Scarps

The FSA has fined Credit Suisse UK £5.95m for systems and controls failings over sales of structured capital at risk products by its private bank. Credit Suisse must also carry out a costly past business review, overseen by an independent third party, in relation to Scarp sales. Between January 2007 and December 2009, 623 Credit […]

Adviser Fund Index

Investment-grade debt appears to be losing its lustre as investors become split between the search for income and perceived value in equity markets. The sterling corporate bond sector became the focus of attention in the aftermath of the Lehman Brothers’ collapse as investors took advantage of opportunities in the asset class. Between August 1, 2008 […]

3

MPs push for Arch cru Parliamentary committee

MPs want to create an Arch cru Parliamentary committee to push for higher levels of compensation for investors. The Financial Mail on Sunday reports that Conservative MPs Guy Opperman and Alun Cairns, Labour MP Tom Greatrex and Jim Shannon, from the Democratic Unionist Party, are calling for a cross-party Arch cru Parliamentary committee to be […]

Kames Capital poaches multi-manager property team from ING REIM

Kames Capital has bolstered its property capability with the appointment of a trio of property multi-managers from ING Real Estate Investment Management UK Mark Bunney, Matt Day and Tony Yu managed more than £2bn of assets including the Osiris property fund and a number of institutional mandates. The trio, which have more 30 years experience […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

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

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com