Investment Focus: What to do in these volatile times Go compare with our comparison table

Investment Focus: What to do in these volatile times

09 August 2011 / by Oliver Roylance-Smith

The current economic environment is one of the most challenging in history for both savers and investors alike. With such a challenging economic landscape, we take a look at some of the options to consider.

Setting the scene

Let us start by setting the scene: 10 year gilt yields at record lows, slow economic growth, the FTSE 100 is hovering around the 5,000 mark and has had it worst weekly performance since just after the collapse of Lehman Brothers, inflation continues to be well above double the Bank of England target and low interest rates look set to stay.

Certainly low yields with persistent inflation and anaemic growth is a toxic combination for traditional investors and you could be fooled to thinking the only option is to bury your head in the sand. So what other options should be considered?

Defined returns and defined risk

Within a few hours of opening, the FTSE had dropped to 4,796. This equates to a loss of just over 21% when compared with it's recent peak of 6,085 in early July and with worsening economic indicators on the horizon, these are particularly difficult times for investors.

Will the FTSE pick up? - of course, but the challenge is knowing when and for how long. Having direct exposure to such market volatility via individual shares or investment funds can be extremely challenging during times like these. This is where the defined risk and defined returns associated with structured investments can be appealing.

These products move the investor’s focus away from the daily ups and downs and provide clear details of the investment term, the returns available and the particular criteria required to receive those returns. Crucially these details are provided before the investment is made giving you the ability to make an informed decision.

With a wide range of different structured investments available, there is plenty of scope to find a solution that meets investor’s needs. One of our most popular plans is the Income Deposit Plan from Meteor which offers both capital protection and the opportunity to receive 7.5% per annum.

There is also the added benefit of there being no hidden additional costs since all charges are taken into account within the investment returns detailed.

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Kick Out Plans look attractive

Kick Out Plans generally have a start date which is known as the ‘strike date’. This is the reference point for whether the plan kicks out in the future and with plans linked to the performance of the FTSE, it will in line with the value on that day.

Whether the plan kicks out in the future will usually depend on the FTSE being the same or higher that this starting value, so the lower the starting value the better.

When markets experience sharp falls, plans that are designed to kick out in the future (normally at the end of year one and then each thereafter) start to look very attractive, such as the Investec FTSE 100 Enhanced Kick Out Plan which offers the opportunity of 10.5% per annum

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No news, feature article or comment should be seen as a personal recommendation to invest. If you are in any doubt as to the suitability of a particular investment please contact us for advice.

Some structured investment plans are not capital protected and there may be the risk of losing some or all of your initial investment. There is also a risk that the company backing the plan or any company associated with the plan may be unable to repay your initial investment and any returns stated, in which case you may not be entitled to compensation from the Financial Services Compensation Scheme (FSCS). In addition, you may not get back the full amount invested if the plan is not held for the full term. The past performance of the FTSE 100 Index is not a guide to its future performance.


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 Product NameISA OptionMaximum Potential ReturnTermMore Info
FTSE 100 Enhanced Kick Out Planyes

10%

per annum

Up to
6 years
More Info >
Structured investment plan with the potential to mature after years 1, 2, 3, 4, 5 or 6. If the plan matures early it will return 10% times the number of years the plan has been in force. Also available for Stocks & Shares ISA and ISA transfer.
FTSE 100 Defensive Kick-Out Planyes

7.75%

per annum

Up to
6 years
More Info >
Structured investment plan with the potential to mature after years 3, 4, 5 or 6. If the plan matures early it will return 7.75% times the number of years the plan has been in force. Also available for Stocks & Shares ISA and ISA transfer.
Kick Out Deposit Planyes

3%

per annum

Up to
6 years
More Info >
Capital protected deposit plan with the potential to mature after years 3, 4, 5 and 6. If the plan matures early it will return 3% times the number of years the plan has been in force. Also available for Cash ISA and ISA transfer.
FTSE Defensive Kick Out Planyes

7.30%

per annum

Up to
6 years
More Info >
Structured investment plan with the potential to mature after years 2, 3, 4, or 5. If the plan matures early it will return 7.30% times the number of years the plan has been active. Also available for Stocks & Shares ISA and ISA transfer.
4 Year Deposit Planyes

12%

at end of term

4 yearsMore Info >
4 year capital protected structured deposit plan which aims to return 12% if the FTSE 100 is higher. Also available for Cash ISA and ISA transfer.
6 Year Defensive Deposit Planyes

24%

at end of term

6 yearsMore Info >
6 year capital protected structured deposit plan which aims to return 24% if the FTSE 100 is higher than 95% of Initial Level. Also available for Cash ISA and ISA transfer.

The value of investments and any return from them can fall as well as rise and you may not get back the full amount invested. Please ensure that you read the Important Risk Information below.