The Morgan Stanley FTSE protected growth plan 7 is a FTSE 100 linked guaranteed equity bond that could mature earlier than its six-year term.
The bond guarantees the return of investors' original capital regardless of the performance of the index. They will get 120 per cent of the growth in the index if the bond runs for six years, but it will mature in year three if the FTSE 100 index has risen by at least 30 per cent by November 29, 2007. Where this happens, investors will get 30 per cent of their investment plus their original capital back.
According to StructuredRetailProducts.com, there are no similar products currently on the market. However, the Woolwich Plan Managers capital growth plan is a similar product with a five-year term. Investors with Woolwich will get a full capital return regardless of the performance of the index plus 100 per cent of the growth in the index if the product runs full term.
There is an early maturity option on the Woolwich bond which can be selected at the outset. If this option is selected, the bond will mature after two years and six months if the index has risen by at least 25 per cent by that point and investors will receive 25 per cent of their original capital.
When choosing between the products, it may simply be a case of investors preferring to tie their money up for five years or six years.