Investments  

Just how risky are new breed of structured product?

Rates of losses were again higher, with around £75,460 of an initial £100,000 being returned over the life of the plan, compared to £91,390 for a single-index plan. Again, this does not include any annual returns that may have been accrued.

Nev Godley, vice president at Morgan Stanley, said the reason for the disparity is that the Euro Stoxx has breached the 50 per cent barrier on ”considerably more occasions” than the FTSE 100 historically.

He said that overall based on an analysis of products with different protection barriers and that measure daily or at maturity, a dual index product would have lost capital “in just over 9 out of 100 scenarios, versus just 1 out of 100 for a 50 per cent FTSE-only barrier”.

Mr Godley added there is “no ‘one size fits all’ solution and each investment decision will be dependent on the investors’ individual risk appetite and understanding”.

Other major structured product firms to join the dual index trend in recent months include Investec, which included two products linked to both the FTSE 100 and the S&P 500 among a suite of launches in August last year.