Barclays launches new FTSE linked structured products
Barclays Stockbrokers has announced the launch of two new structured products - the FTSE 100 Lock-in Note and the Growthbuilder. Both products are available exclusively to Barclays Stockbrokers clients until 17 June 2011. The FTSE 100 Lock-in Note and the Growthbuilder track the performance of the FTSE 100 Index over a six year term and between them offer investors different opportunities for returns, depending on their risk appetite. The products are issued by Barclays Bank PLC and are LSE-listed.
The FTSE 100 Lock-in Note offers investors the chance to accrue a potential 11.25% return each year of the six year term. The returns are ‘locked-in' each year that they apply and are paid at maturity. If the FTSE 100 Index is at or above the Initial Index Level on every anniversary date during the six year period, investors will secure the maximum return of 67.25%. It follows that if the FTSE 100 Index is lower than the Initial Index Level³ on any of the anniversaries, the investor will not ‘lock-in' a return for that year.
When it comes to repayment of the capital, if on any day during the term, the FTSE 100 Index closes lower than 60% of the Initial Index Level AND then at maturity, the FTSE 100 does not finish either at or above the Initial Index Level, then investors will lose 1% of their capital for every 1% that the FTSE 100 has fallen.
The Growthbuilder offers a potential 6.25% return each year. Each anniversary that the FTSE 100 Index is at or above the Initial Index Level, a return of 6.25% will be ‘locked-in' for that year. As with the FTSE 100 Lock-in Note, total returns are paid at maturity. The difference with the Growthbuilder is that after the six year term, investors will also receive back their full capital investment. Even if an investor achieves zero returns over the course of the investment, their initial capital will still be repaid in full.
Des Byrne, Head of Barclays Stockbrokers said: "We listen to our clients and do our best to respond to their priorities and feedback. These products are designed to appeal to investors with different risk/reward appetites. Although both are based on the performance of the FTSE 100 Index, they give investors the choice between different levels of repayment of capital at maturity and corresponding potential returns. The Growthbuilder is designed for investors who prefer the comfort of knowing that their capital will be repaid regardless of the performance of the FTSE; whereas the FTSE 100 Lock-in Note will appeal to investors seeking higher returns who are prepared to accept greater risk to their capital. Both investments can be bought within an ISA or a SIPP."
If investors sell the investment before the end of the term, they could get back less than originally invested, irrespective of the performance of the Index.