Daniel Fenton - 12/06/2019
Lowes Financial Management has been publicly identifying which structured investments the firm ‘Prefers’ for almost twenty years, in which time we have demonstrated something of a knack for selecting the best solutions for our clients. The methodology in which we decide what products we ‘Prefer’ is based upon qualitative individual assessment of the plans that are available, in addition to a further assessment of the current market.
A ‘Preferred’ product is based on our own assessment and may not be right for you. The granting of ‘Preferred’ status should not therefore be taken as advice or a recommendation to invest into that product.
We currently have nine structured products marked as ‘Preferred’, six of which are capital at risk and the other three are deposits. Details of each plan can be found below.
Mariana Capital 10:10 Plan June 2019
Option 1: Offers a 7.9% gain for each year the plan has been in force. The plan will mature early in the event that the FTSE 100 Index closes at, or above a reducing reference level which reduces each year from year two onwards. The Reference Level in year two is 102.5% of the Initial Index Level and this level is reduced by 2.5% on each subsequent anniversary and so will be 100%, 97.5%, 95%, 92.5%, 90%, 87.5%, 85% and 82.5% of the initial level for years three, four, five, six, seven, eight, nine and ten respectively.
Option 2: Offers a 10.3% gain for each year the plan has been in force. The plan will mature early in the event that the FTSE 100 closes at, or above its initial index level on any early maturity date from year two onwards.
Option 3: Offers a 12.45% gain for each year the plan has been in force. The plan will mature early in the event that the FTSE 100 closes at least 5% higher than the initial index level on any early maturity date from year two onwards.
Counterparty: Citigroup Global Markets Ltd
Index Link: FTSE 100
Closing Date: 25th June 2019
Capital Protection Barrier: 70% - capital will be lost in line with the fall in the FTSE 100 Index over the ten years, if the plan does not mature early and the index has fallen by more than 30%
For more information, please click Option 1, Option 2 or Option 3
Investec/Lowes 8:8 Plan 11
The 8:8 is another plan that has been developed in co-operation with Lowes, featuring an extended term of eight years and a semi-annual kick-out feature from year two onwards. Just like the 10:10, the 8:8 offers a greater number of opportunities for an early maturity which in turn, gives an increased chance for a positive return. Maturity will occur if, on any early maturity date the FTSE 100 Index closes at or above 92% of the initial index level. The Investec/Lowes 8:8 Plan 11 offers investors the potential for a 7% gain for each year held (3.5% semi-annually).
Counterparty: Investec Bank plc
Index Link: FTSE 100
Closing Date: 19th July 2019
Capital Protection Barrier: 60% - capital will be lost in line with the fall in the FTSE 100 Index over the ten years, if the plan does not mature early and the index has fallen by more than 40%
For more information, please click here
Société Générale UK Step Down Kick-out Plan (UK3) Issue 6
This maximum eight-year plan features the potential to mature on any of the plan's anniversaries from year two onwards, returning the capital investment in full, plus a 7.65% gain for each year the plan has been in force. The plan will mature early in the event that the FTSE 100 Index closes at, or above a reducing Reference Level which reduces in year five. The Reference Level in year two, three and four is 100% of the Initial Index Level and this level is reduced by 5% on each subsequent anniversary and so will be 95%, 90%, 85% and 80% of the initial level for years five, six, seven and eight respectively.
Counterparty: Société Générale + UK3 (Lloyds Banking Group plc, HSBC Holdings plc and Barclays plc)
Index Link: FTSE 100
Closing Date: 19th July 2019
Capital Protection Barrier: 60% - capital will be lost in line with the fall in the FTSE 100 Index over the ten years, if the plan does not mature early and the index has fallen by more than 40%
For more information, please click here
Société Générale UK Kick-out Plan (UK3) Issue 6
This maximum eight-year plan features the potential to mature on any of the plan's anniversaries from year two onwards, provided that the FTSE 100 Index closes at a level equal to, or higher than the Initial Index Level, returning the capital investment in full plus a 10% gain for each year the plan has been in force.
Counterparty: Société Générale + UK3 (Lloyds Banking Group plc, HSBC Holdings plc and Barclays plc)
Index Link: FTSE 100
Closing Date: 19th July 2019
Capital Protection Barrier: 60% - capital will be lost in line with the fall in the FTSE 100 Index over the ten years, if the plan does not mature early and the index has fallen by more than 40%
For more information, please click here
Capital at risk plan call and barrier levels
The chart shows the required index level for each of the capital at risk products that we have preferred to mature early or breach their capital protection barrier. We have used a hypothetical strike level of 7300 based on an average of the price of the FTSE 100 in May.
All plans mentioned above put capital at risk.
Investec FTSE 100 6 Year Deposit Plan 12
This six-year structured deposit offers investors the potential for a gross interest payment of 42% provided that the FTSE 100 Index, subject to averaging over the final six months, is above the Initial Index Level at maturity.
As a deposit, this plan is designed to return investors’ capital in full at maturity, regardless of the movement in the Index throughout the investment term.
Counterparty: Investec Bank plc
Index Link: FTSE 100
Closing Date: 19th July 2019
For more information, please click here
Investec FTSE 100 Defensive Kick-Out Deposit Plan 12
This maximum six-year structured deposit features the potential to mature on any of the plan’s anniversaries from year three onwards, provided that the FTSE 100 Index, subject to five-day averaging, is above a reducing reference level, returning the invested capital in full, plus a 4.5% gross interest payment (simple) for each year the plan has been in force. The Reference Level in year three is 100% of the Initial Index Level and this level is reduced on each subsequent anniversary and so will be 95%, 90% and 85% of the initial level for years four, five and six respectively.
If the plan does not mature early and the Final Index Level is equal to or below 85% of the Initial Index Level, no interest will be returned; however, investors’ capital should still be returned in full, regardless of the performance of the index during the investment term.
Counterparty: Investec Bank plc
Index Link: FTSE 100
Closing Date: 19th July 2019
For more information, please click here
Investec FTSE 100 Kick-Out Deposit Plan 86
This maximum six-year structured deposit features the potential to mature on any of the plan’s anniversaries from year three onwards, provided that the FTSE 100 Index, subject to five-day averaging, is above the Initial Index Level, returning the invested capital in full, plus a 6% gross interest payment (simple) for each year the plan has been in force.
As a deposit, this plan is designed to return investors’ capital in full at maturity, regardless of the movement in the Index throughout the investment term.
Counterparty: Investec Bank plc
Index Link: FTSE 100
Closing Date: 19th July 2019
For more information, please click here
Deposit plan call/final observation levels
Deposits are protected by the FSCS up to £85,000 per individual per financial institution and so investments up to this amount will not be exposed to the risk of the deposit taker defaulting. Deposit plans do not have capital protection barriers as by definition they are a deposit; therefore the return of capital is not dependent upon the underlying asset. Once again, we have used the same hypothetical strike price of 7300. The FTSE 100 6 Year Deposit Plan 12 only has one observation at the end of its six-year term which is 100% of the initial level.
Disclosure of interest: Lowes has provided input into the concept, development, promotion and distribution of the 10:10 & 8:8 Plans and has a commercial interest in these investments as a result of its involvement. Where Lowes is involved in advice on or the intermediation of this investment to retail clients, it will not receive any payment from Investec or Mariana for its input but instead, equivalent funds will be donated to UK registered charities at the direction of the Lowes Charity Committee, the annual report for which is available on request. The aim of developing Plans in co-operation with providers, with Lowes input, is that they should be amongst the best available in the market. Lowes has robust systems and controls in place to ensure that it manages any actual or potential conflicts of interests in its activities.
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