According to the firm, the FTSE defensive gilt-backed growth plan is the first retail structured product to be both cash collateralised and backed by UK Government gilts.
The plan offers a pre-defined return of 9 per cent per year, paid as long as the FTSE 100 index does not fall by more than 10 per cent on each annual anniversary of the plan, for a maximum of three years. It also includes a 50 per cent soft protection barrier, observed at maturity only.
The bonds purchased to secure the capital protection for the plan are Standard & Poor’s AAA rated UK government bonds.
Morgan Stanley also uses collateral arrangements to minimise credit risk exposure by posting cash into a segregated account on a daily basis to secure the returns created by the derivative.
The plan is available for direct investment, Sipp/Ssas investors, Isa investments for 2008/2009, transfers of existing ISAs and discretionary investment with a minimum investment is £3,000.
Morgan Stanley executive director for structured products Marc Chamberlain says: “As credit risk concerns become more important, we believe we have developed a product drawn from our experience in the discretionary market, as well as direct feedback gathered from financial advisers, which offers retail investors a high degree of credit risk protection, yet still provides potential for excellent returns.”