Tempo Issue 24: Long Income Plan now launched
Further to Tempo’s launch of Issue 24 of its product suite last week, you can now find a summary of Tempo’s Long Income Plan and links to the full details below.
Tempo’s Long Income Plan offers two options, each offering the potential for fixed income, payable quarterly, based on defensive conditions, with a unique memory feature.
Understandably, many investors may currently be feeling like they are ‘caught between rocks and hard places’, in the search for investments which they think will deliver viable future returns, with attractive risk / return profiles.
This is particularly so for savers and investors seeking income.
Highlighting the plight for savers and investors looking for income, NS&I rates are virtually zero, most deposit rates are similarly negligible, and the yield on much of fixed income / bonds is extremely low, with some clear potential risks to capital (e.g. rising inflation): increases in bond yields come with falls in bond prices.
In a ‘lower and slower for (much?!) longer’ environment, we certainly think that the Long Income Plan presents a viable option and potential solution for professionally advised savers and investors seeking income.
As always, please see the full plan literature for full details of the plan and the features, terms and conditions, including the risks.
Demand for Tempo’s plans has been high recently, so please contact us swiftly if investing is of interest.
THE TEMPO LONG INCOME PLAN
Tempo’s Long Income Plan provides two investment options, each offering the potential for regular fixed income, payable quarterly, based on a choice of defensive conditions, with an innovative memory feature, and opportunities for automatic early maturity from the 3rd anniversary.
The potential income for each option of Tempo’s LIP are:
> LIP1 is designed to pay income of 4.60% p.a., if the FTSE 100 FDEW EWFD is at or above 60% of its start level, allowing the index to fall by 40%, with the benefit of the memory feature.
> LIP2 is designed to pay income of 5.90% p.a., if the FTSE 100 FDEW EWFD is at or above 80% of its start level, allowing the index to fall by 20%, with the benefit of the memory feature.
CASPA: CURRENTLY AVAILABLE STRUCTURED PRODUCTS ANALYSIS
There are currently 6 single index income products available, including Tempo’s LIP1 and LIP2.
Notably, no other income products have such a low end of term barrier level as Tempo’s LIP1 and LIP2 (the other products all have end of term barrier levels set at 65%, compared to Tempo’s at 60%) or have an income condition (for conditional income products) as low as Tempo’s LIP1 (also set at 60%).
In addition, no other income products include a memory feature – which is an important feature and a compelling USP for the Tempo Long Income Plan.
Comparisons to other products is based on analysis of all products in the market as at 22.10.21, using FVC research reports, comparing potential returns and product features.
It should be noted that the Tempo plans use an equal weight, fixed dividend version of the FTSE 100, known as the FTSE 100 EWFD.
Please see the section below regarding the FTSE 100 EWFD.
IMPORTANT POINTS REGARDING THE FTSE 100 EWFD | TARGET MARKET
The Tempo plans link to the FTSE 100 EWFD.
The FTSE 100 EWFD was developed by FTSE Russell with the aim of helping investment banks offer improved terms on structured products for investors.
Improved terms can include: lower end of term barriers; lower conditions for generating positive returns; and higher potential returns.
Société Générale have an exclusive license with FTSE Russell to use the FTSE 100 EWFD. And Tempo have agreed exclusivity to use the index in their plans with Société Générale.
It should be noted that the FTSE 100 EWFD will perform differently to the FTSE 100, due to the equal weighting and fixed dividend. This means that the returns from plans linked to it might be higher or lower than the returns from a similar product linked to the FTSE 100.
Neither equally weighted nor market capitalisation weighted indexes are better or worse than the other. Each offers a different approach and has different merits: risks and returns will be different for each and will depend on the future stock market environment and the performance of the companies in each index.
While the fixed dividend can help provide higher potential returns or lower risks for structured products, it can affect the level of the FTSE 100 EWFD negatively, when the fixed dividend is higher than the level of dividends being paid by companies in the index.
It is important to carefully consider the current level of the FTSE 100 EWFD, the level of its fixed dividend and the outlook for its future level.
Importantly, Tempo have identified the target market for investors in Issue 24 as investors who have a positive view of the future level of the FTSE 100 EWFD, over the medium to long term.
Information about the FTSE 100 EWFD can be found in the plan brochures.
You can find the level of the FTSE 100 EWFD by visiting the ft.com website:
https://markets.ft.com/data and using the symbol ‘GPSOC002:FSI’.
ALL OF TEMPO’S PRODUCTS ARE ‘DELIBERATELY DEFENSIVE’
Tempo’s products are described as ‘deliberately defensive’, meaning that they are all designed so that they can generate some or all of their returns without requiring the market index which they are linked to, to rise, with a defined level of protection should the market index fall.
Tempo’s products benefit from the firm’s operational strength and rigorous approach to governance, are backed by strong issuers / counterparties, and are based on a single index, with a deep end-of-term barrier.
These are the Tempo hallmarks.
We think this approach has real merits and can add real value for investors in balanced and diversified portfolios, in the current market environment.
THE UNIQUE TEMPO PLEDGE ‘STATED TERMS OR BETTER’ …
Tempo’s plans come with their fabulous ‘Stated terms or better’ pledge.
This unique feature allows Tempo to increase the terms of a plan above those stated in brochures, if the stock market and other factors during an offer period mean that they can do so.
For example, while the Long Income Plan brochure details option 1 as offering 4.60% pa, if stock market movement and other factors mean that Tempo can increase this further during the offer period, the actual terms may be increased to, say, 5.00% p.a., which would be confirmed following the start date.
What’s not to love about this great feature, which only Tempo offers!
DON’T FORGET THE RISKS
As with all forms of investment there are risks involved. These plans do not guarantee to repay the money invested.
The potential returns of the plans and repaying the money invested are linked to the level of the stock market and also depend on the financial stability of the issuer and counterparty bank.
Past performance is not a guide to future performance and may not be repeated.
The value of investments and the income from them may go down as well as up and investors may not get back any of the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money.
As always, the recommendation and common-sense approach is to consider product solutions as a portfolio, never over-exposing oneself to a point of financial pain and suffering liquidity or counterparty over exposure.
Please ensure that you read the plan documents for full details of the plan, including the features and the risks.
ONLY AVAILABLE WITH ADVICE …
Tempo’s products can only be accessed with advice.
The promotion of the plans does not constitute ‘advice’ to invest. Advice is always specific to an individual investor’s circumstances and needs, following the process of ‘know your customer’, with the aim of ensuring that any product is suitable for an investor.
Demand for the Tempo products is expected to be high.
We would suggest early contact if you are interested to invest in Issue 24, in order to try to ensure availability and access.
Please contact us to discuss any aspect of these products.
Best Price FS Team