Product: Morgan Stanley releases growth and income plans

IFA demand has encouraged Morgan Stanley to release a new tranche of its FTSE-linked growth and income plans, covering three- and six-year terms.

FTSE Income Plan 5 runs for a three-year term and pays a fixed quarterly coupon of 1.45% or 5.8% pa. Capital is 100% protected at maturity as long as the index has not closed at or below 50% of its opening level during the term.

FTSE Bonus Growth Plan 7, meanwhile, is a kick-out plan that runs for a six-year term and offers growth of 12.5% pa. If early maturity occurs in year two, growth of 25% is paid in addition to the return of investor capital. Capital is protected at maturity if the index has not fallen by 50% or more from its start value.

Closing date for investment for both plans is 8 March 2012. For ISA transfers into the FTSE Bonus Growth Plan 7, the deadline is 1 March 2012.

Morgan Stanley is the counterparty for both plans.

MM View:

Structured products continue to attract a lot of criticism throughout the industry for bad behaviour committed among a small number of providers in the past. Many critics also feel structured products are not suitable investments for the mass affluent.

However, for serious investors who have genuine financial needs for this sort of investment, structured products can be as important in a portfolio as a property or emerging markets holding.

With potential growth rates of 5.8% pa for FTSE Income Plan 5 and 12.5% pa for FTSE Bonus Growth Plan 7, these products offer a return on capital that beats current cash rates and even some equity investments.

Like any investment, a structured product’s suitability must be considered before it is recommended, and due diligence must be undertaken on the provider.

GC