Graham Devile, managing director of Meteor Asset Management, said the product had been developed for investors who prefer products that track indices but are willing to take slightly more risk.
He said the FTSE/Stoxx Kick Out offered an “attractive coupon uplift” compared with similar products that are only exposed to a single index.
Mr Devile added: “Despite the levels of volatility historically experienced by the Euro Stoxx 50, with the eurozone now showing greater stability and the index trading near 3200, we believe this provides potential to generate attractive returns for investors.”
| Key features |
Term: six years, two weeks Underlyings: based on the performance of the FTSE 100 and Euro Stoxx 50 indices Investment return: if, on any measurement date, the closing levels of both indices are at least equal to their opening levels, the product will mature early and provide an investment return of 10 per cent for each annual period the product has been in force. Otherwise, no investment return will be paid and the product continues If the product runs for the full term, it will provide an investment return of 60 per cent, as long as the final level of the lowest-performing index is at least equal to its opening level Capital protection barrier: 60 per cent of the opening level on lowest performing index. Final level observation only Counterparty: Royal Bank of Canada Tax: capital gains tax |
Adviser verdict
Jason Butler, founder and senior partner at London-based Bloomsbury Private Wealth, said: “I can’t see any reason why most sane, intelligent people would use structured products in their portfolio, because the due diligence is excessive for most people. We don’t use structured products at all. A lot of people use these products as a long-term hedge for downside protection, but that means they don’t get any benefit from dividends and they cap the upside. Intrinsically, if you hold long-term money in structured products, you are buying protection you don’t need. If you are using them as pseudo-cash for a specific liability in two years, then fine, but they are not for everyone.”
