LSIC adds defensive kickout trigger to 10:10 Plan

Lowes Structured Investment Centre (LSIC) has added a defensive option to the second tranche of its ’10:10 Plan’, the first ever 10-year kickout structured product marketed in the UK market, which has been developed in co-operation with Mariana Capital and Societe Generale.

The new defensive option will generate positive returns and trigger early maturity and kickout, even if the FTSE 100 has fallen by 10% from its strike level throughout the investment term, as part of what is now a triple option product for investors, in response to adviser feedback and demand.

“The first defensive autocalls were introduced to the market in 2008 and they have proven to be popular options ever since,” said Chris Taylor (pictured), head of strategic development at LSIC. “Professional advisers obviously all have clients with various needs and interests, whether that is the level of potential growth/income wanted and views on market risk, such as single or dual or triple-index, or stocks, etc, or whether it is views on credit risk and what type of counterparty is used. There are most certainly many investors seeking lower-risk strategies, who accept commensurately lower potential returns.”

Whilst it is acknowledged that past performance is not a reliable indicator of future performance, independently conducted back-testing of the defensive option, dating back to the inception of the FTSE 100 index in 1984, shows that the strategy would never have failed to generate positive returns for investors, according to Taylor.

The second tranche of the plan, said Taylor, follows the soft closure of the first issue, in September, with sales surpassing the hedged assets, despite these being increased several times during the offer period and offers three options for investors including one paying out 7% potential annual returns, if the FTSE 100 index is not more than 10% below its starting level at any anniversary, from year three; one paying out 9% potential annual returns, if the FTSE 100 index is at or above its starting level at any anniversary, from year three; and another one paying out 11% potential annual returns, if the FTSE 100 index is 10% or more above its starting level at any anniversary, from year three.

“One of the keys to the approach with the 10:10 Plan strategy is, as a ‘by advisers, for advisers’ initiative, to offer and advance choice in the advisory market, and for advisers/investors looking for different risk and return exposures we have worked with Mariana Capital and Societe Generale to focus on different kickout trigger levels, where the plan now offers triple options, combining all these with the extended maximum term of the plan, of ten years,” said Taylor. “The choice is useful and the feedback we get from advisers is that a defensive structure can help meet the needs of investors with lower risk profiles. “

The products will be open for subscription until November 27.