Investments  

Dura Capital launches structured product

Dura Capital launches structured product

Dura Capital has launched a structured product aimed at providing downside protection for investors in the FTSE 100.

Structured products are derivative investments that pay a return based on a pre-determined level of performance.

In the case of this product, which is backed by Credit Suisse, investors receive 7 per cent a year for eight years as long as the FTSE 100 is at 75 per cent or higher of the level it was on the day the plan launched. The 7 per cent is not paid annually, instead investors receive all of the payments at the end.

If the FTSE 100 is above one of those pre-defined levels on one of the anniversary dates, the plan will finish early.

If the plan does not mature early and the FTSE 100 is below 75 per cent it was at the start of the plan, then investors receive no return on their investment, if it is below 60 per cent of the starting level, then investors lose 1 per cent for every 1 per cent the FTSE is below that level.

Ian Lowes, of Lowes Financial Management in Newcastle said: "Dura's 27th plan replicates the same defensive autocall structure as their 25th, which closed to new subscriptions on April 5.

"The coupon on the latest issue is however 0.25 per cent lower at 7 per cent reflecting the slight deterioration in pricing, which is primarily a function of reduced market volatility.

"Accepting the adage about past performance, the terms of this plan are such that there has never been a day in history when commencing this trade would have ultimately meant that it matured with a loss.

"In fact, for every day the FTSE 100 has been in existence, comencing this particular style of structure would have resulted in an early maturity with a gain."

He added: “Given that none of us can predict where the market will be heading, whilst we all hope the defensive characteristics of the Dura plan will never be necessary, they may provide peace of mind when the plan is used as part of a portfolio and yet that part, whilst having a capped return, still has potential to outperform other elements in many market scenarios.”

david.thorpe@ft.com