Ian Lowes, Lowes Financial Management
This week saw the first time a 10:10 Plan had a possible early maturity date where all three options have rolled over, accumulating their potential coupons for potential maturity next year, or subsequently. This is partly a function of the October 2017 issue being the first that had the potential to mature after two, rather than three years, which was the case with all previous issues and options (of which 25 out of 26 so far, matured on the third anniversary).
We all know that investment should be considered for the medium to long-term and so its not unreasonable to expect an auto-call not to mature at its first opportunity, particularly when its only been two years. The previous issues along with many other auto-calls have enjoyed early success thanks to broadly positive markets but the last two years haven’t been so kind to those with a short-term investment time horizon.
When the October 2017 10:10 Plan commenced the FTSE was above 7500 and in truth, no one knew it was going to prove to be a relative high – it had been rising and so was optimism. But of course, no one knew where next. We all hope and expect the market to grow over the medium to long term and we all know to expect up’s and downs along the way – we just don’t know whether our ups will be followed by downs, or vice-versa.
And this highlights a primary benefit of the 10:10 Plan. Those that invested will have done so committing to more than a two-year term, so no one is going to be particular disappointed that it did not mature at its first opportunity. But sitting back, knowing that for each year it takes to recover to the start level you are banking 8.5% simple* with the risk being that it never recovers within the ten year term, or the bank fails, is not such a bad place to be.
The latest issue of the Mariana 10:10 Plan again has three options, all of which can potentially mature from the second anniversary and all have a maximum ten-year term. With the ‘at the money’ option (Option 2) offering a potential coupon of 10.94% for each year held and capital at risk from market movements, at final maturity only if the FTSE 100 fails to recover by every, relevant anniversary date and falls more than 30% over the ten years, we believe this is again, very worthy of consideration as part of a portfolio. Returns and the return of capital for the current issue are dependent upon the continued solvency of Goldman Sachs.
The 10:10 Plan is available for direct investment, ISAs, Pensions, Corporates and Trusts and can be invested in via a number of investment platforms or off-platform.
Further details of the latest 10:10 Plan can be found on StructuredProductReview.com.
* 10:10 Plan October 2017 Option 2Structured investments put capital at risk. Past performance is not a guide to the future. Disclosure of Lowes interests: Lowes has provided input into the concept, development, promotion and distribution of this Plan. The provider's charges/fees are built into the terms of the investment - Lowes has a commercial interest in the Plan as a result of its involvement in its development and promotion. All Plan returns are stated after allowing for these charges/fees. Where Lowes is involved in advice on or the intermediation of this investment to retail clients, it will not receive any payment from Mariana for its input. 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 - and, as such, be granted 'Preferred' status, on their merits. 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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