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Morgan Stanley shows capital value



Capital-protected bond

Growth linked to the performance of the FTSE 100 index

Minimum-maximum investment:
£5,000-no maximum,
Isa £3,000-£7.000

Six years

The greater of 26% of original capital or 60% growth in index at end of term

Original capital returned in full plus 26% growth regardless of performance of index

Closing date
June 18, 2004,
Pep/Isa transfers June 4, 2004

Initial 3%

Tel: 020 7425 9000

Morgan Stanley&#39s FTSE Capital Plus Plan is a capital-protected bond linked to the FTSE 100 for six years.

WBS Granville Wealth Management certified financial planner John Holian thinks there are better ways of providing a lower risk return with potential for equity growth through a balanced portfolio.

He says: “This product comes across as a very cautious investment aiming to return the original capital and a minimum return of 26 per cent over the six year term or a compound 3.92 per cent a year. Although the return is similar to the gross redemption yield on a UK gilt it does provide some potential for additional returns if the FTSE 100 index grows by more than 43.35 per cent.”

However, Holian adds that the returns are not particularly exciting and with structured products receiving a bad press he wouldn&#39t expect to be recommending it. He says: “I think it is very cautious and this is reflected in the returns. If a client requires a steady low return then a gilt or corporate bond fund should provide a better return.

&#39On the other hand if they think they cold do better with the extra returns from the FTSE 100, a fund investing in the FTSE 100 and paying dividends would do better under the same investment conditions That would provide returns above 26 per cent over six years.”

Holian sees competition coming from other structured products and distribution unit trusts from New Star and Invesco Perpetual. He points out that Morgan Stanley has designed the product to lure people back into investment, so cautious offerings would also compete.


Suitability to market: Average
Investment strategy: Average
Adviser remuneration: Average
Overall 5/10


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