The Royal Bank of Scotland (RBS) has launched a 'defensive' auto-call product for independent financial advisers, featuring a decreasing knockout level feature for the first time.
The UK Step-down Defensive Kick-out Plan 1 is a six-year 50% soft-protected product linked to the performance of the FTSE100 index. The product will mature early on any annual observation date in which the underlying level is above a predetermined level, paying out a 7% gross return for each period elapsed. The knockout levels for each anniversary are 100%, 97%, 94%, 91%, 88% and 85%, respectively.
The bank said the rationale for the product was based on findings from an independent survey by ICM Research, which found that among those investors holding or planning to invest in equity investments 24% believed that the FTSE100 would fall; 37% believed its growth outlook would either "stay the same" or "fall" over the next five years; and only 9% believed that it would grow by more than 25% over the same period (5% pa in simple terms).
The UK Step-down Defensive Kickout Plan 1 is available as an advised-only sale via independent financial advisers (IFAs), and is available to retail investors, corporates, pensions, SIPPs, SSASs, and Isa Stocks and Shares investments.
RBS said the launch follows the success of the recent IFA product, UK Growth Early Kickout, another RBS-backed product linked to the FTSE100, which matured early earlier this month paying out a 20% gross return to investors.
The capital protection of the product is provided by RBS. The UK Step-down Defensive Kickout Plan 1 will be open for subscription until 29 June.