Structured product specialist Hilbert has launched a product it claimed would be “widely available” targeted at people seeking income in retirement.
Hilbert was established in 2012 by former Old Mutual head of structured products Steve Lamarque to specialise in cross asset, structured solutions covering equities, rates and commodities.
The UK Conditional Quarterly Autocall structured product is linked to the performance of the FTSE 100.
It will pay a quarterly income of 1.75 per cent provided the closing level of the FTSE 100 is at least 80 per cent of the level it was at the start of the plan.
That equates to an annual yield of 7 per cent, if the FTSE does not fall by more than 20 per cent from the starting level on any of the quarterly observation dates.
The income paid is gross of tax.
The current yield on the FTSE 100 is less than 4 per cent.
The product has a duration of 10 years maximum, but can “kick out” if the FTSE 100 is 10 per cent more at the end of any quarter from 12 November 2018.
If a structured product “kicks out” this means investors should expect to receive the income payment for that final quarter, and the repayment of their original investment in full.
The launch of this product comes in light of data from Investec showing that sales of its products to advisers are up 40 per cent this year.
Structured products had previously been in the dog-house with many financial advisers after many of them under performed during the financial crisis.
Minesh Patel, a chartered financial planner at EA Solutions in Finchley, London, said he invests in structured products that offer downside protection as a way to smooth out the returns when conventional funds are enduring a period of tough performance.