View more on these topics

Morgan Stanley on the search for income

Morgan Stanley IQ has introduced issue four of its FTSE income plan, a structured product designed to provide a fixed annual income of 6.6 per cent regardless of the performance of the FTSE 100 index.

The plan also offers some protection for market falls at maturity in that the original capital will be returned in full to investors provided the index does not fall by more than 50 per cent during the term. If this safety net is breached, the index needs to recover to at least its initial value at the end of the term, otherwise investors will 1 per cent of their capital for each 1 per cent fall in the index.

Investors looking for a structured product to provide a fixed level of income over six years could choose the Barclays Wealth regular income bond December 2010, which is due to close on January 17. Its fixed annual returns are lower at 5.5 per cent, but it has a monthly income option, paying 0.45 per cent, that the Morgan Stanley product lacks. The capital protection on offer from the Barclays product is on the same basis at the Morgan Stanley plan.

As at January 5, 2011, a higher fixed income over six years than the Morgan Stanley plan provides can be achieved from plans linked to more than one index, or where part or all of the income is linked to index performance. Incapital Europe’s equity income plan provides a 1.75 per cent maximum quarterly income – equivalent to 7 per cent a year – but this, and the return of the original capital, depends on FTSE 100 performance. The six-year Jubilee regular income plan is linked to the FTSE 100 and S&P 500 and pays an unconditional 2 per cent quarterly income in year one, but further income payments depend on index performance.

Recommended

Henderson to acquire Gartmore for £335m

Henderson has announced to the stockmarket it is to acquire the entire stock capital of Gartmore for an estimated £335m. The deal, which Henderson says “significantly enhances its presence in UK retail asset management”, will see the enlarged group’s assets under management climb to £78 billion. Based on the closing price of 138.2p per Henderson […]

2

Barclays says taxpayers should not bail out banks

Taxpayers should not bail out banks that get into difficulties, according to Barclays chief executive Bob Diamond. Giving evidence to the Treasury select committee this morning, Diamond said banks which run into trouble should be able to be wound down by the regulator. He said: “No banks should ever be a burden on the tax […]

Tony Greenham

Thinktank says TSC probe on banking lacks diversity

The Treasury select committee’s inquiry into competition and choice in the banking sector is too focused on middle-class consumers, according to thinktank New Economics Foundation. Speaking to Money Marketing, NEF head of finance and business Tony Greenham says he is concerned that the inquiry does not address the needs of lower-earners. He says: “The terms […]

Standard Life will offer capped drawdown from April

Standard Life has become the first provider to confirm it will offer capped drawdown from April this year. In December, the Treasury confirmed details of proposals which will remove the requirement to buy an annuity at age 75. This includes the introduction of new capped and flexible drawdown regimes. Standard Life head of Sipp Alistair […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment