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Platinum edge from Meteor

Meteor Asset Management has introduced a structured product linked to the FTSE 100 and S&P 500 indices, with two early kick-out options.

The Prima platinum plan 7 has a term of five years and two weeks, but may mature earlier if index performance triggers the early maturity feature.

For the 100 per cent option, early maturity will be triggered on any anniversary date providing the indices are at or above their initial values. If this happens at the end of year one, investors will leave the plan with 12.5 per cent growth and their original capital. If the feature is not triggered, the bond will continue on the same basis, so that 25 per cent growth plus the original capital is potentially paid at the end of year two, 37.5 per cent at the end of year three and so on.

The 90 per cent option is similar to the 100 per cent option but its early maturity features allows for index falls of up to 10 per cent. Early maturity will be triggered on any anniversary date providing the indices are at least 90 per cent of their initial values. If this happens at the end of year one, investors will receive their original capital plus 8 per cent growth. If the feature is not triggered, the bond will continue on the same basis, potentially paying 16 per cent after two years, 24 per cent after three years and so on.

For both options, investors will get a full capital return at maturity providing one or both indices do not fall by more than 50 per cent without recovering to at least their initial values. If this safety net is breached, capital will be reduced by 1 per cent for each fall in the worst performing index.

Data from the Structured Product Review website shows that Gilliat Financial Solutions’ annual kick-out October 2010 is similar, but has another option where the indices are at least 95 per cent of their initial values at the end of any year.

Gilliat’s option one is comparable with Meteor’s 100 per cent option but offers slightly lower returns at 12.25 per cent after one year, 24.5 per cent after year two and so on. However, the reverse is true when comparing Meteor’s 90 per cent option to Gilliat’s option three, as Gilliat’s plan provides 8.25 per cent after one year, 16.5 per cent after two years and so on.

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