Volatility – A welcome friend of those who use structured investments!
Following on from the recent blog “Choppy (Volatile) investments markets; keep an eye on structured products”, click the link to read: https://www.bestpricefs.co.uk/blog/choppy-volatile-investment-markets-keep-an-eye-on-structured-products/, we write to advise that Dura Capital have today launched their 35th public offer – the Credit Suisse FTSE 100 Defensive Autocall Plan 35 which offers the potential for 7.5% return p.a., this is considerably more than their last product of this type which offered 7% as a potential return. Dura Capital have taken advantage of the recent volatility and managed to lock in a very strong coupon of 7.5% p.a. for a product that offers returns even if the FTSE100 was to fall by 25%!
For those of you not familiar with Dura Capital, you may wish to consider the following……
Dura Capital itself has a track record of 18 months of issuing structured products however their experience in structured products actually extends much further back to their parent company, Catley Lakeman, the leading originator of structured products in the UK for institutional clients*. With over 10 years’ experience in this space across multiple market cycles, they are able to leverage from Catley Lakeman’s expertise.
*Source: Catley Lakeman as at 4 July 2019.
For those considering this and other plans click the link below to read the product brochures and kid documents. For those of you who maybe new to Structured Products, essentially there are a number of possible outcomes with a structured product although there is no active management, so a clearly defined investment journey is presented under contract term.
This Plan is designed to repay your initial investment and deliver a return dependent on the performance of the FTSE 100.
The terms are based upon the following headlines, but you must read and understand the full contract terms prior to investing:
· The potential return of 7.50% p.a. auto-callable annually from year 2
· Dependent on the performance of FTSE 100
· 60% capital at risk barrier at maturity
· Maximum term 8-year maturity
For those investors worried about liquidity – and rightly so, you will be pleased to know that these products are LIQUID, there is a misconception that these products, once purchased, cannot be sold. This was a function of providers having inadequate administration historically rather than the investments actually being illiquid. Structured products in the UK are always issued as Senior Unsecured Debt. These have exhibited near perfect liquidity in the 15 years the market has existed, including every day during the Global Financial Crisis a decade ago. Please see the daily trading prices of Dura Capital’s products below;
Dura Capital currently have two offers available to the public, a defensive autocall and an income autocall;
Plan 35 – 7.5% p.a.– Credit Suisse FTSE100 Defensive Autocall
Plan 34 – 1.63% Income per quarter – Credit Suisse FTSE100 Quarterly income Autocall
Structured products – Who for?
Given the level of barrier protection and also the predictability of the journey, structured products have been used for decades by pension/wrap providers to lock in a very high probability of a return that is linked to equity markets but is not exposed to the same short term downside risk of direct equities. As a result of this information, in recent years, private investors are using within their own SIPP and SSAS pension funds and given the changes to pension’s freedom a lot of individuals are increasingly utilizing structured investments whether that be in the form of Structured Deposits which are capital protected – more akin to long term bank deposits, using the main market index as the return defines or Structured Investment products that produce a risk to capital, with generally speaking a higher coupon.
SIPP – Below is a list of the Sipp providers in which Dura Capital’s products can be held. If you would like to utilize the tax benefits of a SIPP alongside the benefits of the investment of a structured product then Best Price FS will be more than happy to provide a SIPP application form, although we charge an increased cost via a pension wrapper due to increased administration.
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.
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.
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 exposure.
As always, if you require advice simply get in touch.
Best Price FS Team