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CompareStructuredProducts.com - 11/11/2020

Over the course of the last five years, the Mariana Capital 10:10 Plan has become a regular feature in the UK retail sector with 41 tranches and 114 individual options having been released. To date, every 10:10 Plan has been a capital-at-risk autocall product, however this year the 10:10 is branching out…

A few weeks ago, the sector enjoyed the release of the first in the 10:10 Income and Growth series, a concept designed to combine an income element with capital growth potential. We believe this plan to be worthy of the 10:10 label and expect it to grow popular within the sector, not least with interest rates resting at an all time low of 0.1%.

The Plan offers investors a potential regular income stream paid quarterly for up to 10 years, though its kick-out feature means that the plan can successfully mature on any quarterly observation date from the third anniversary onwards. In the event of an early maturity being triggered, investors will receive back their original capital and any income due in respect of that period, plus a capital gain that increases for each quarter the plan has been in force.

The introductory plan – Mariana Capital 10:10 Income and Growth Plan December 2020 – will pay a regular income of 0.75% throughout the investment term provided that the FTSE Custom 3.5% Synthetic Fixed Dividend Index (FTSE CSDI) closes at, or above 70% of the level recorded on 18th December 2020 (the Initial Index Level) on each quarterly observation date.

An early maturity can occur on any quarterly observation date from the third anniversary onwards, provided that the FTSE CSDI closes at least 5% above the Initial Index Level. Therefore, assuming markets remain stable and take three years to rise slowly, this plan will mature on 18th December 2023, having paid income totalling 9%, and will earn a capital gain of 12%. If the Index is less than 105% of the Initial Index Level, the plan will continue to further observation dates, with the potential capital gain rising by 1% for each three-month period that passes.

If there were to be another event causing consistent market downturn throughout the term, then the Plan has a degree of protection achieved through two of the 10:10 attributes: an extended maximum investment term of ten years and an end of term capital protection barrier of 70%. These functions allow for an extended period of market recovery, whilst repositioning investor exposure to stock market risk through a protection barrier that is only observed at the end of the ten-year term. It is important to understand that if the stock market is more than 30% down on the 18th December 2030, then investors’ capital will be lost at a rate of 1% for every 1% the Index closes below the Initial Index Level.

Whilst you should rely on the product literature for a full description, the December 2020 Plan can be summarised as below:

- The Plan will pay an income of 0.75% each quarter provided that the Index closes no more than 30% below the Initial Index Level

- The Plan will mature early on any quarter from the third anniversary onwards, returning invested capital in full in addition to a gain of 1% for each quarter that it has been in force, assuming the Index closes at least 5% above the Initial Index Level

- This is a capital-at-risk plan with a maximum ten-year investment term

- Capital-at-risk protection barrier: 70% of the 18th December 2020 level of the Index

- Capital-at-risk protection barrier observation date: 18th December 2030 (only if not matured sooner)

- Counterparty bank: Morgan Stanley & Co. International plc – all income payments, returns of capital and capital gains are subject to their continued solvency

- Investment start date: 18th December 2020

- Closes 11th December 2020 (25th November for ISA Transfers), but may become oversubscribed sooner

- Minimum investment is £10,000 only

- Investment method: ISA / ISA transfer, Individual, Joint, SIPP, Trust, Corporate, Partnership

- Individual / Joint gains subject to Capital Gains Tax, and income payments are subject to UK Income Tax

As with the November 2020 and December 2020 editions of the standard 10:10 Plan, the 10:10 Income and Growth Plan December 2020 will derive its performance from the FTSE CSDI, a new custom made index designed to closely replicate the total returns of the FSTE 100 Index. For more details on the index, and for an explanation of the rationale behind moving away from the FTSE 100 Index, please visit here, or reference the product literature.

The 10:10 Income and Growth Plan has been designed to meet the needs of investors seeking a regular income stream for discretionary spending and of those who are seeking to benefit from stock market rises, whilst accepting a cap on their potential returns in exchange for a degree of capital protection. It should be appreciated that the income payments are contingent on the performance of the underlying Index and will be suspended in the event of a significant market downturn; potential income yielded from the Plan should not be relied on for essential expenditure.

If you would like to know more, please reference the Plan literature which can be found here. Alternatively, you can email any queries to Contact@CompareStructuredProducts.com.