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Spotlight on.... Structured Products

In a falling interest rate environment, structured products can offer investors an opportunity to achieve returns ahead of inflation. Fairbairn Private Bank can provide access to products offering enhanced yields, which can typically be structured for a variety of periods and can be linked to underlying markets such as commodities, shares or currency. They can be designed to provide full, or partial, capital protection.

To provide an example, for investors prepared to consider a three-year term without full capital protection, Fairbairn Private Bank can arrange a product linked to the FTSE 100. This product pays interest annually at a rate of 6.62% and at maturity, in three years time, investors will receive their capital back if the FTSE 100 is higher than 50% of its current level. If the FTSE 100 is below 50% of its current level at the end of the three years, investors will receive the cash equivalent to the performance of the FTSE 100. For example, if the FTSE 100 is at 40% of its current level at the end of the three years investors will receive 40% of their capital plus the 6.62% interest each year on the original capital.

This product could suit an investor who believes the FTSE 100 is likely to close up, or down (but not more than 50% down), in three years time and who is looking to significantly improve the rate of return available and achieve partial protection of capital.

The benefits:

  • Offers the potential for higher returns than is currently available for a normal cash deposit
  • Annual coupon
  • Returns well ahead of prevailing and forecast inflation
  • Stable element of portfolio over three years if you consider the FTSE will be above 50% of its current level in three years.

The risks:

  • Capital is not protected
  • There is no access to money during the term of the deposit
  • This product is arranged with a third party and investors must be comfortable that the issuer has a stable credit rating and will be able to repay their capital upon maturity

This facility, and others, can be integrated with our wide range of banking, treasury and investment products through our Focus platform.

The bank's private banking team is able to provide guidance on structuring this type of deposit, or other bespoke options. For more information, please call us on +44 (0) 1624 645000 or, alternatively, details are available online. 

All terms mentioned above are indicative and correct at 16/01/09. These terms may not be repeatable but act as examples for illustrative purposes.

The price, or value of, or income from, your investments can fall as well as rise and you may not get back the original amount invested. Exchange rate changes may affect the value of investments. Past performance is not necessarily a guide to future performance.