A new structured product from Gilliat, an arm of Arbuthnot, will offer geared exposure to equity indices in a way that challenges other trackers, the firm has said.
Gilliat’s International Growth Portfolio will have a six-year term and offer investors access to a choice of three markets: the FTSE 100, the EURO STOXX 50, and the Russell 2000.
If the underlying index rises by up to 25% through the product’s life, the investor will receive a 125% return on capital. For index gains between 25% and 42%, investors will receive the 125% of capital plus five times the percentage rise above 25% for the FTSE 100, 4.85 times for the EURO STOXX 50, and 2.9 times for the Russell 2000.
For rises that are above 42%, the return will be capped at 210% for the FTSE 100, 207.45% for the EURO STOXX 50, and 174.3% for the Russell 2000.
If the index falls through the six years, the investor will receive 1.25 times the end level of the index as a percentage of the start level. This means the index would have to drop by more than 20% for investors not to reclaim their capital. The product would only underperform the market if the index rose by more than the maximum cap.
‘With the International Growth Portfolio we are showing that structured products can go head to head with tracker funds and, in all but a strongly rising bull market, offer better performance,’ commented Adrian Neave, Gilliat’s managing director.
‘We believe this product will make advisers and investors sit up and take notice of structured products as providing mainstream index-based investments.’
The product’s counter-party is Morgan Stanley, and its minimum investment is £3,000.