Investec Structured Products has launched a new structured deposit with a shorter investment term in a move to offer savers an alternative to traditional saving options.
The FTSE 100 4 Year Deposit Plan 1 is a four-year structure linked to the FTSE 100 index featuring a digital payoff profile. The product will pay a fixed return of 17% (4.25% pa) to investors, provided the index is higher than its starting level after four years, which is well above the standard fixed-income deposit rate offered by UK banks of between 1% and 1.30%.
Savers are challenged to find competitive rates of interest from traditional savings accounts, said Gary Dale, head of intermediary sales at Investec Structured Products. “In today’s financial environment, savers have typically had to accept lower returns on their deposit savings, but structured deposits offer them the chance to achieve higher rates of interest without taking any risks to the capital,” said Dale. “Although most autocall structured deposits have matured early after one year, we have decided to replace our six-year FTSE 100 deposit with this one, as we feel it offers more value.”
A sample of Investec structured deposits' recent maturities shows that the bank’s range has returned an average of between 11.6% and 43%, with average investment terms of between two and five years.
According to Dale, after monitoring fixed-income bonds and savings rates in the high street, Investec realised that a four-year term would offer a good participation rate on a digital payment.
The new product, said Dale, will be particularly appealing for those hoping to achieve a higher rate of interest than that offered by high street banks, but also to those who have a positive view of the FTSE 100 index rising over the four-year period. “Structured deposits will typically have a fixed term of five years or more, so the shorter four-year term offers investors greater flexibility and quicker access to their savings,” said Dale.
Structured investments, said Dale, continue to drive Investec’s structured products sales and are doing “exceptionally well”, although the bank’s deposit range “is also doing well but not getting as much traction because of the interest rates environment”.
“Advisers are favouring products with rates of between 5% and 6% pa, and deposits cannot offer those rates,” said Dale. “However, we would not launch a product if we didn’t think it offered no value. We test our products every four weeks.”
The bank’s investment products range has delivered an average of between 10% and 83% on average investment terms of between one and five years.
Investec remains the top provider of structured products in the UK market with a 24% market share in terms of issuance and sales. Year to date, Investec is the most active provider in the UK retail market with 70 structured products launched followed by Meteor (39 products) and Societe Generale (35 products).
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