iDAD The Callable Deposit Plan Issue 14 – March 2022
IDAD launch issue 14.
Investment Term: up to 7-years 1-week
Participation Rate: 100% Participation in the growth of the FTSE™ 100 Index if the Deposit Taker does not ‘call’ the product prior to its maturity date.
Interest Rate: 5% per annum (1.25% per quarter) if the Deposit Taker ‘calls’ the product on any observation date prior to its maturity date.
Deposit Taker: Goldman Sachs International Bank
How the Investment works
This is a 7-year 1-week Deposit Plan linked to the performance of the FTSE 100 Index The Deposit Plan is constructed to offer a potential return of 5% per annum (1.25% per quarter) to the final Callable Observation Date if the Deposit Taker calls the investment early, or 100% participation in any growth of the FTSE 100 Index at maturity.
If the Deposit Plan is not called early, at maturity, the investor receives a return of 100% of any positive growth in the FTSE 100 Index For example, at maturity, if the FTSE 100 Index has risen 10% from the Initial Index Level, the investor will receive 100% of their investment back plus a 10% growth payment (10% x 100%).
The opportunity for full capital protection and growth is the key aim of this investment.
The investment is linked to the FTSE 100 Index (see page 7 of the brochure for full details) and investors will benefit from growth in the Underlying Index unless, the Deposit Taker, Goldman Sachs International Bank ( GSIB) “calls” the deposit early, in which case investors would be paid a competitive fixed rate of return of 5% p.a.
The initial investment into the Deposit Plan, minus any initial Adviser Fee, will be returned in full on the Maturity Payment Date, or if GSIB calls the Deposit Plan early, regardless of the performance of the Underlying Index.
The Callable Feature what is this and when may this occur?
On each Observation Date from end of year 2, the Deposit Taker has the option to ‘call’ the Deposit Plan at their discretion. This means the Deposit Plan will be redeemed at that point and investors will receive their Initial Investment into the Deposit Plan, together with the fixed rate of return of 5% p.a. (1.25% per quarter).
The main reason this may happen is because GSIB believes the growth payment that could be paid out at maturity, may be higher than the Interest that has accumulated so far.
For example, if after 4 years the Underlying Index has grown by 40% and seems set to continue growing, the Deposit Taker may feel that they will be better off redeeming the Deposit Plan and paying 4 years of the fixed annual return, rather than potentially paying the Index related return once the Deposit Plan matures.