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The Colour Purple

Joshua Wynn - 06/03/2019

Historically, wealth has been inextricably associated with one colour. The Phoenicians were a sea-faring people initially based on the coast of the Eastern Mediterranean around what is now Lebanon. Not only did they dominate the carrying trade around the first millennium BC, with colonies as far-flung as Tangier and trade routes extending well beyond the Pillars of Hercules; the Phoenicians held the monopoly on a certain dye produced by harvesting aquatic Murex snails: the colour purple.

A thousand years later and another power has risen on the wheel of Fortune. It’s 49 BC and Gaius Julius Caesar enters Rome having annihilated the Gallic confederation and brought their leader, Vercingetorix, back to the city for a public execution. Caesar is at the zenith of his political and military career so far, wielding absolute power as dictator. He wears a Tyrian purple toga.

Around 1150 AD Anna Comnena, writing a history of the reign of her father, the Byzantine emperor Alexios I, describes Porphýra. ‘The Porphyry Chamber’ is a structure in the Great Palace of Constantinople – a square-based structure with floor, wall and ceiling veneered in purple – set apart for the confinement of the Empress preceding childbirth. Porphyrogénnetos (those born ‘in the purple’) are considered to bear greater legitimacy to the throne.

1938 AD; Sir Gerald Kelly paints King George VI’s official portrait. They are in London, but in a scene which must be charged with symbolism and perfectly balanced, the backdrop is a spacious interior of the Viceroy’s Building in Delhi. The king wears his Coronation robes and the Imperial State Crown (accommodating one of the world’s largest natural diamonds, Cullinan II) is beside him – both are purple.

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Returns on offer from Investec’s latest tranche of products have tumbled quite significantly in comparison to last month’s dizzying heights. The Investec/Lowes 8:8 Plan for example, is down from 8.5% to a still-respectable 7.6%. We could turn to the usual suspect – volatility – when groping for an explanation; no doubt this is a primary factor, but it should also be noted that Investec Bank Plc’s Moody’s credit rating has improved from A2 to A1 in tandem with their product launch. A stronger rating may have had an adverse effect on the returns offered by Investec’s plans this month, due to the reduction in perceived risk of investing with them as a counterparty and so a fall in their funding rate.

In other news, Meteor launched their first deposit-based plan since last summer. The Defensive Supertracker Deposit Plan offers an interest payment of 1.4 times the rise in the FTSE over six years from 85% of its level on the strike date. The plan’s return is capped at 35%, which would be achieved if the underlying rose just 10% above its initial level by the end of the plan’s term. In contrast, Investec’s new Kick Out Deposit Plan 84 offers a possible return of 6% per year held, with a maximum term of six years and the potential to kick out from the third anniversary if the FTSE is at or above its initial level.

Lastly, the Lowes UK Defined Strategy Fund has added a further trade, being an at-the-money autocall from Goldman Sachs International and a defensive autocall from Canadian Imperial Bank International. The open-ended structure of the Fund means that investors can make or withdraw their investments on a daily basis, thereby providing greater flexibility. It also means that, unlike regular structured product launches, the time constraints of investing to gain structured product exposure (such as ISA transfer deadlines, closing dates etc.) do not apply. More information, including a digital brochure and Key Investor Information Document, is available at www.UKDSF.com

Disclosure of interest: Lowes has provided input into the concept, development, promotion and distribution of the 8:8 Plan and is investment manager for Lowes UK Defined Strategy Fund. Lowes has a commercial interest in these investments as a result of its involvement. Where Lowes is involved in advice on these investments to retail clients, it will not receive benefit of any fees for its involvement, other than those fees payable by the client to Lowes. Lowes has robust systems and controls in place to ensure that it manages any actual or potential conflicts of interests in its activities.