Morgan Stanley has launched a six-year structured product aiming to provide investors with an income of up to seven per cent per annum.
The Morgan Stanley FTSE Income Accumulator Plan will make income payments every three months as long as the index stays within a prescribed range of 4,500 to 9,000 index points for a proportion of that quarter.
The level of quarterly income is determined by taking weekly observations of the closing level of the index during the quarter. Income accrues for every weekly observation that the FTSE 100 closes within the range, to a maximum of 1.75 per cent, a quarter. But if the index closes outside the 4500 to 9000 range on every weekly observation during the quarter, then no income payment will be made for that three month period.
At maturity, as long as the market is at or above 4000 points, investors will receive the repayment of their initial investment in full but if the FTSE 100 is below 4000 points then repayment of the initial investment will be reduced by the amount the index has fallen, from the product’s start to end date.
Nev Godley, vice president, Morgan Stanley, says “With interest rates remaining low for the foreseeable future, many investors are still searching for income-generating investments. This Plan might appeal to income investors who do n0t have a firm view on whether the market will go up or down from the current level.”
The product is open for investment until 27 August 2013, with the deadline for Isa transfers set for 19 August. The minimum investment is £3,000.