Morgan Stanley has launched several structured products that it says are aimed at investors who believe the market is likely to fall in the near to mid-term, those looking to generate returns over a medium-term horizon and those favouring regular income.
The plans, the FTSE Defensive Digital Growth Plan12, FTSE Defensive Kick Out Plan 15 and the FTSE Income Accumulator Plan 4, have a subscription window closing 31 January 2014 with an early cut-off for Isa transfers of 24 January.
The six-year term Defensive Digital Growth Plan 12 offers a fixed return of 50 per cent at maturity, paid as long as the FTSE 100 is positive, flat or has not fallen by more than 15 per cent over the term.
It has a soft protection barrier that means capital is repaid if the final index level has fallen between 15 per cent and 50 per cent, though this would translate to a loss in real terms. Capital is at risk if the index falls by 50 per cent or more; above this level capital losses will be equal to the index decline.
The FTSE Defensive Kick Out Plan 15 also has a six-year term with a potential to mature at three, four or five years with a fixed return equal to 8.5 per cent per annum as long as the FTSE 100 is at or above 95 per cent of its initial level. If there is no kick out, a 51 per cent growth return will be paid if the index closes at or above 95 per cent of its initial level at maturity.
It similarly includes a soft protection feature, though the index needs to have closed above 50 per cent of its initial level on every day during the investment term. If it has fallen by 50 per cent or more, the capital return will be reduced in line with the negative performance of the index.
Finally, the Morgan Stanley FTSE Income Accumulator Plan 4 carries a 6.5 year term with income payments every three months. The plan will make income payments every three months as long as the FTSE 100 stays within a prescribed range of 4500 to 9000 for a proportion of that quarter.
The level of quarterly income is determined by taking weekly observations of the closing level of the index: income accrues for every weekly observation that the FTSE 100 closes within the range, to a maximum of 1.625 per cent per quarter, or 6.5 per cent per annum. If the index closes outside the range on every weekly observation during the quarter, no payment will be made.
At maturity investor will be repaid as long as the FTSE 100 closes at or above 4,250 index points, but below this level losses will again be directly proportional to the index.
