Archive for the ‘Growth investments’ Category

Investment Focus: new launch offering 33% return even if the FTSE falls 40%

Written by Tags: , ,

Since there will always be investors who are not confident the markets will rise over the medium term, there will always be the potential for defensive investments to appeal – and the range of plans on offer has certainly grown in recent years. A defensive investment plan is simply a plan that is designed to provide an investment return even if the stock market fails to rise, or in some circumstances goes down. This week we take a closer look at a new launch defensive plan that offers a 33.0% fixed return even if the FTSE has fallen up to 40%.

The FTSE highs and lows

Since the FTSE 100 Index (‘the FTSE’) broke through the 7,000 point barrier for the first time in March 2015, it has been as low as 5,537 points (February 2016), and has reached its highest closing level on record at 7,429 points (March 2017). Indeed, the FTSE has been well over 7,000 points since the start of the year and whilst the Index remains at what are historically high levels, defensive investment plans have become increasingly popular.

Defensive investment plans

This type of plan attempts to offer investors the best of both worlds, by balancing less of the investment upside, with the opportunity to achieve these returns even if the market fails to rise. This means they are designed for investors who have a neutral or negative outlook of what could happen to the stock market in the coming years, and yet who would still like the opportunity to receive investment level returns.

Plan summary

The FTSE Defensive Growth Plan from Focus aims to provide a fixed return of 33% at the end of the six year term, and will do so provided the value of the FTSE at that point is at least 60% of its value at the start of the plan. Therefore, the FTSE can fall up to 40% and investors would still receive a 33% growth return, along with a full return of their original capital.

If the Index has fallen by more than 40% at the end of the term, no growth will be achieved and your initial capital will be reduced by 1% for each 1% fall. This plan therefore puts your capital at risk and you could lose some or all of your initial investment.

33% return even if the FTSE falls up to 40%

This is a strong headline since investors will receive a positive return, even if the FTSE falls by quite some way from its value at the start of the plan. This means that even if you are not confident the FTSE will rise at all, you could still receive a fixed return of 33% unless the FTSE falls by more than 40%. The 33% return is equivalent to 4.86% compound annual growth.

‘Defensive’ feature

Since the fixed return on offer is dependent on the performance of the FTSE 100 Index, the defensive element of the plan is an important one to understand. Rather than the Index having to finish higher than its value at the start of the plan, the Index can fall up to 40% and the fixed return of 33% is still paid. Whilst the FTSE continues at what are historically high levels, this ‘defensive’ feature could be an appealing one, whist the fixed return is also paid if the FTSE goes up.

Some capital protection from a falling market

Provided the FTSE 100 Index has not fallen by more than 40% at the end of the term, the 33% growth return is paid to you along with a full return of your initial investment. Since the market can fall up to 40% before your initial investment is at risk, the plan offers some capital protection against a falling market. This should be considered in conjunction with the potential return on offer when reviewing the plan’s overall risk versus reward. Should the Index have fallen by more than 40%, your initial investment is reduced by 1% for each 1% fall. In this case you would lose at least 40% of your capital.

Defined risk and defined returns

One of the features of this plan is that the potential returns are stated up front, prior to investing. This allows the investor to consider the potential upside in the context of the amount of risk they are taking, since you know at the outset exactly what needs to happen in order to receive the stated level of growth as well as a return of your initial investment.

ISAs and ISA transfers

The plan accepts ISA investments up to the maximum £20,000 ISA allowance as well as ISA transfers, from both Cash ISAs and Stocks & Shares ISAs. You can also make non-ISA investments and the minimum investment into the plan is £5,000.

Credit risk & compensation scheme

This plan is a structured investment so your initial capital is used to purchase securities issued by the plan’s counterparty, Credit Suisse AG. This means that Credit Suisse’s ability to meet their financial obligations becomes an important investment consideration. If the bank fails or becomes insolvent, this could affect both the payment of any growth return as well as the return of your original investment, and you would not be covered by the Financial Services Compensation Scheme for default alone.

Credit ratings

Standard & Poor’s is one of the main global credit rating agencies and as at 9th June 2015, Credit Suisse AG has an ‘A’ credit rating with a stable outlook. The ‘A’ rating denotes a strong capacity to meet its financial commitments and the stable outlook indicates that the rating is not likely to change in the short to medium term, i.e. in the next 6 months to 2 years.

Credit Suisse AG profile

Credit Suisse AG is one of the world’s leading financial services providers and is a subsidiary of Credit Suisse Group AG. As an integrated bank, Credit Suisse Group AG offers a range of financial products and services across the areas of private banking, investment banking and asset management. Credit Suisse is headquartered in Zurich and as at the end of 2016, employs around 47,170 people and operates in 50 countries worldwide.

Fair Investment view

Commenting on the plan, Oliver Roylance-Smith, head of savings and investment at Fair Investment Company Limited, said: “Whist the FTSE continues at well over 7,000 points, if you are not confident that the markets will rise in the medium term it can be difficult to find investment ideas. Defensive plans such as these do offer an alternative, and with a product headline of a 33% growth return unless the FTSE 100 Index falls by more than 40%, the risk versus reward of this plan could make for a compelling opportunity. Of course this is dependent on you view of what might happen in the coming years, but if the FTSE had fallen up to 40% in 6 years time, and yet you still achieved 33% growth plus a return of your initial capital, some would consider that a good return on their investment.”

 

This plan is open for new ISA investments up to the £20,000 ISA allowance, Cash ISA and Stocks & Shares ISA transfers, as well as non-ISA investments, with a minimum investment of £5,000.

Click here for more information about the Focus FTSE Defensive Growth Plan »

 

No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. Fair Investment Company does not offer advice and any investment transacted through us is on a non-advised basis. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

Tax treatment of ISAs depends on your individual circumstances and is based on current law which may be subject to change in the future. Always remember to check whether any charges apply before transferring or switching an ISA.

This is a structured investment plan that is not capital protected and is not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a risk of losing some or all of your initial investment. There is 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 addition, you may not get back the full amount of your initial investment 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.

Our 10 best last minute ISA ideas for 2017

Written by Tags: , ,

Our 10 best last minute ISA ideas

With just over one week to go until the 5th April deadline, if you’re reading this then I will assume you have left using some or all of your £15,240 ISA allowance (2016/17 tax year) to the last minute. The good news is that not only is there still time to sort out this year’s ISA allowance, some of the ideas below also allow you to sort out next year’s £20,000 ISA allowance (2017/18 tax year) as well – the Double ISA option. As time is running out, here is a quick review of our best last minute ISA ideas…

1.    Our best-selling Investment ISA

For those looking for a high level of growth but also with the opportunity to mature early or ‘kick out’ each year, the Enhanced Kick Out Plan from Investec offers 10.65% for each year invested provided the FTSE 100 Index at the end of each year is higher than its value at the start of the plan (subject to averaging). This is our best selling growth plan with ISA investors over the last 12 months and also features a Double ISA option. Capital is at risk if the FTSE falls by more than 50%. Click here for more information »

2.    Fixed income Investment ISA

Investec’s Enhanced Income Plan is a regular ISA season top seller, mainly due to it paying a fixed income of 5.04% per year regardless of what happens to the stock market. The plan also has a fixed term and monthly income payments, so you know exactly how much you will paid, when, and for how long. This plan features a Double ISA option. Capital is at risk if the FTSE 100 Index falls by more than 50%. Click here for more information »

3.    Managed Portfolio Investment ISA

The Nutmeg ISA gives investors access to fully managed, globally diversified portfolios that are regularly rebalanced. The ISA is easy to set up, and you can choose the level of risk you wish to take. Annual fees start at 0.75%, reducing to 0.35% for larger investments, and the minimum investment is just £500, although for portfolios below £5,000 they also ask for a minimum monthly contribution of £100. ISA transfers are also accepted. Capital is at risk. Click here for more information »

4.    Defensive Investment ISA best seller

The Defensive Growth Plan from Investec offers a fixed return of 34% (equivalent to 5.0% compound annual growth) plus a return of your original capital, provided the FTSE 100 Index has not fallen by 50% or more at the end of the investment term. If it has, no growth will be achieved and your capital will be reduced by 1% for each 1% fall, so you could lose some or all of your initial investment. This plan also features a Double ISA option. Click here for more information »

5.    High Yield Investment ISA top seller

The Meteor FTSE Contingent Income Plan pays a quarterly income of 2.05% for each quarter the FTSE 100 Index does not end less than 20% below its value at the start of the plan. So even if the FTSE falls up to 20% each quarter, you would still achieve 8.20% annual income. This plan features a Double ISA option. Capital is at risk if the FTSE has fallen by more than 40% at the end of the investment term. Click here for more information »

6.    FTSE Tracker Investment ISA

Tracker investment plans usually offer investors a multiple of any growth in the FTSE 100 Index over a set term. The newly launched FTSE Enhanced Tracker Plan from Focus offers twice the rise in the FTSE after 6 years, with no upper limit on how much it can rise. The plan could also end after just 3 years at which point, provided the FTSE has risen by at least 10%, you will receive a fixed return of 45% plus your initial investment back. This plan also features a Double ISA option. Your capital is at risk if the FTSE has fallen by more than 40% at the end of the investment term. Click here for more information »

7.    Innovative Finance (Peer to peer) ISA

The Innovative Finance ISA (IFISA) is the latest type of ISA (introduced on 6th April last year) and is designed to provide a tax-free wrapper for investors in Peer-to-Peer Lending platforms. Crowd2Fund is an FCA regulated platform where your investment is used to lend to businesses that require funding. Initially, each business submits a business proposal for funding directly to Crowd2Fund and once received, their risk and due diligence team then review the proposal against their strict acceptance criteria. If successful, the business is then listed on the platform and investors pledge the amount they want to invest and the interest rate. The estimated APR (also known as the target APR) is currently 8.7%. The platform also accepts ISA transfers. Capital is at risk. Click here for more information »

8.    Junior Investment ISA

Charles Stanley offer a Stocks and Shares Junior ISA with a minimum lump sum investment of £500, or just £50 per month. They offer a fully-featured investment platform so you can tailor your portfolio as you want, alternatively they have a Foundation Fundlist which is a list of preferred funds across all of the major sectors, selected by their in house research team. There is a platform charge of 0.25% per annum with no additional charge for buying and selling funds. You can save up to £4,080 this tax year (£4,128 in 2017/18) and you can transfer in Child Trust Funds and existing Junior ISAs. Capital is at risk. Click here for more information »

9.    Self-select Investment ISA

You can open a Hargreaves Lansdown Stocks & Shares ISA with a lump sum of just £100 or you can start a monthly direct debit from just £25 per month. With their ‘Do-it-yourself’ ISA you can invest in over 2,500 funds, with no charge when you buy and sell funds and annual management charges starting at 0.45% per annum. You can also choose to invest in shares from as little as £5.95 per trade, as well as bonds, ETFs and investment trusts. Capital is at risk. Click here for more information »

10.   Low Monthly Contribution Investment ISA

If you are only looking to invest a small amount each month, The My Select (ISA) from Scottish Friendly allows you to invest from as little as £10 per month. You can stop, restart, raise or lower your payments whenever you want, and you have a range of Scottish Friendly funds to choose from including stock market and bond funds. As at 31/12/15, they look after assets worth more than £2.6 billion. Remember, the value of your investment can go down as well as up and you could get back less than your have paid in. Click here for more information »

 

Click here to compare Cash ISAs »

Click here to compare Investment ISAs »

Click here to compare our Top 10 Investment ISA plans »

Click here to compare Junior ISAs »

 

No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. Fair Investment Company does not offer advice and any investment transacted through us in on a non-advised basis. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. Different types of investment carry different levels of risk and may not be suitable for all investors. The past performance of the FTSE 100 Index is not a guide to its future performance.

Some of the investments mentioned are structured investment plans that are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a risk of losing some or all of your initial investment. There is 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 addition, you may not get back the full amount of your initial investment if the plan is not held for the full term.

Tax treatment of ISAs depends on your individual circumstances and is based on current law which may be subject to change in the future. ISA transfer charges may apply, please check with your provider.

2017 ISA season selections – our Top 5 Investment ISAs

Written by Tags: , , , ,

With only a few weeks to go before the end of the tax year, time is running out to maximise the tax benefits of your ISA allowance before the deadline on 5th April 2017, otherwise it will be lost forever. This has already been another very busy ISA season, and whilst Cash ISA savings rates continue at their historical lows, it is perhaps not surprising that the trend in the increased use of the Stocks & Shares ISA that has taken place over the last couple of years, is still continuing. So to help you know where our other investors are putting their money this ISA season, we bring you our most popular Investment ISAs.

Our Top 5 Selections

Below we have listed some of our most popular Investment ISA plans, featuring both income and growth investments. With income continuing to play a critical role for many investors, the attraction of having tax free income is understandable. Whilst for investors looking for growth, the popularity of defensive investments is reflected in our selections, as the level of the stock market in recent years has led more and more investors to search for opportunities that offer investment level returns even if the market goes down slightly.

Your ISA allowance

The ISA allowance for the current tax year (2016/17) is £15,240, whilst all of the plans detailed below accept Cash ISA and Stocks & Shares ISA transfers. All of the plans also offer a Double ISA option, whereby you can invest the current tax year ISA allowance as well as next tax year’s ISA allowance (2017/18 ISA allowance is £20,000) via one application form – thereby offering the opportunity to invest up to £35,240 into new ISAs. Please check the individual plan for further details and for any application deadlines that apply.

 

Potential 10.65% annual growth

With the potential for double digit returns and the opportunity to mature early from year one onwards, the Investec FTSE 100 Enhanced Kick Out Plan has proved consistently popular with a wide range of investors and has been our best selling Investment ISA again this year. The plan will return 10.65% annual growth (not compounded) provided the value of the FTSE 100 Index at the end of each year is higher than its value at the start of the plan (subject to averaging). Your initial capital is at risk if the Index falls by more than 50% during the term, and also finishes below its starting value, in which case your capital will be reduced by 1% for each 1% fall, so you could lose some or all of your initial investment.

Fair Investment view: “On 1st March the FTSE closed at its highest level on record, but where will the market be in one year, or two year’s time? Depending on your view of what might happen to the FTSE 100, the ability to achieve 10.65% annual growth, even if the Index stays relatively flat, perhaps helps to explain why this plan has proved so popular. So if the combination of high growth returns, the ability to mature early, as well as some capital protection against a falling market sounds appealing, this might make for a compelling opportunity in the current investment climate.”

Click here for more information »

 

Up to 8.20% annual income

The FTSE Contingent Income Plan from Meteor offers a quarterly payment of 2.05% during the plan if at the end of each quarter, the value of the FTSE 100 index has not fallen by more than 20% from its value at the start of the plan – that’s a potential 8.20% income each year. If the Index has fallen by more than this, no income would be paid for that quarter.

The plan has a maximum term of 10 years, but also offers the opportunity to receive your initial capital back in full before then – if the FTSE rises 5% or more at the end of each quarter (from year 2 onwards), you will receive your income payment for that quarter, along with a full return of your initial investment – this means your investment ends early. If the plan does not finish early, your initial investment is returned at the end of the plan provided the FTSE has not fallen by more than 40%, measured at the end of the fixed term only. If it has fallen below this level, capital will be reduced by 1% for each 1% fall, so you could lose some or all of your initial investment.

Fair Investment view: “Those seeking income from their investments often put the potential yield and frequency of payments as their top priorities, so the headline yield of up to 8.20% is attractive and the cap on any income is balanced against the conditional capital protection on offer, thereby offering a competitive balance of risk versus reward. At 8.20%, the potential income from this latest issue is the highest currently available from this type of plan – and with a maximum term of 10 years, this investment offers a long term, high income opportunity.”

Click here for more information »

 

5.04% fixed income each year

Our next plan is from Investec and is our best selling income investment this year, for both ISA and non-ISA investors. The current issue of the FTSE 100 Enhanced Income Plan pays a fixed income of 5.04% per year, with monthly payments of 0.42% paid to you regardless of the performance of FTSE.  Capital is at risk if the FTSE falls by more than 50% during the investment term. If it does, and the Index also finishes below its starting level then your original capital will be reduced by 1% for each 1% fall, so you could lose some or all of your original investment.

Fair Investment view: “The current issue of the Enhanced Income Plan is the first time since its launch that it has offered a five year fixed term (previously six years), whilst the plan continues to offer a fixed income, paid to you each month. Knowing exactly how much you will be paid, when and for how long are appealing features, and by offering a high fixed income rather than a variable income based on the performance of the stock market, this plans offers something different to income seekers.”

Click here for more information »

  

34% return even if the FTSE falls up to 50%

Defensive plans offer investors a competitive return on their capital even if the stock market goes down slightly. With the FTSE maintaining historically high levels in recent years, these plans have risen in popularity and the FTSE 100 Defensive Growth Plan from Investec is no exception. The plan offers a fixed return of 34%, provided the FTSE 100 Index at the end of the term is at least half of its value at the start of the plan (subject to averaging). So the FTSE can fall up to 50% and you still receive a fixed growth return of 34%. If at the end of the plan the FTSE has fallen by more than 50%, no growth will be achieved and your initial capital will be reduced by 1% for each 1% fall, so you could lose some or all of your initial investment.

Fair Investment view: “If the FTSE had fallen up to 50% in 6 years time, and yet you still achieved 34% growth plus a return of your initial capital, would you consider that to be a good investment? Taking into account the performance of the FTSE in recent years, it is perhaps understandable why many investors are considering defensive investment plans. By offering the opportunity to return 5% compound annual growth provided the market does not fall more than 50%, this plan could be appealing for ISA investors who wish to take a defensive view of what might happen to the stock market in the medium term.”

Click here for more information »

 

Potential 7% annual growth even if FTSE falls up to 35%

Following on with the theme of defensive investments, the newly launched FTSE 100 Defensive Step Down Kick Out Plan from Investec offers the opportunity for 7% for each year invested (not compounded), provided the FTSE 100 Index is above the required level at the end of each year. The required level is 100% of its starting value at the end of year 2, and then reducing each year thereafter down to 65% in the final year. So if the plan kicks out in the final year, you would receive 42% growth along with a full return of your initial investment.

If the FTSE is below the required level each year no growth return will be achieved, and at the end of the plan your original capital will be returned unless the FTSE 100 Index has fallen by more than 40% at the end of the term (subject to averaging). If it does, and also finishes at or below 65% of its starting value, your initial capital will be reduced by 1% for each 1% fall, so you could lose some or all of your initial investment.

Fair Investment view: “For those investors concerned about the historically high level of the FTSE and would therefore like to include a defensive element to their investment, this plan offers the opportunity for investment level returns not only if the FTSE goes up, but also if it stays flat or even falls by almost 35% in the coming years. By combining this with some capital protection should the stock market fall, this plan could offer a compelling balance of risk versus reward for those who are not confident that the FTSE will rise significantly in the medium term.”

Click here for more information »


Important reminder – why do an ISA?

One of the main reasons for using an ISA is it’s tax treatment since no tax is payable on the income you receive, or any capital gains that you make, and there is also no need to declare any ISA income or capital gains on your tax return. They therefore provide tax efficient income and/or growth on your investment, the benefit of which can be compounded over time. See our Top 10 Tips for the 2017 ISA season for further help and tips on how to make the most from this important time of year. Please also note that with all of these investments, our experienced Investment Customer Services team is available on 0845 308 2525 to answer any questions you have.

How to apply

When you click for more information on any of the above plans you will be able to request a brochure pack which will be sent to you by post and email. This will include everything you need to invest, whether applying for an ISA, transferring existing Cash ISAs and/or Stocks & Shares ISAs or making on-ISA investments. Also note that these plans have different application deadlines, and may also close early so it is important to submit your application as soon as possible. Minimum investments and arrangement fees also apply.

Click here to compare more Investment ISAs »

 

No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

Tax treatment of ISAs depends on your individual circumstances and is based on current legislation which are subject to change in the future. ISA transfer charges may also apply, please check with your provider before transferring an ISA.

These are structured investment plans which are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a risk of losing some or all of your initial investment. There is 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 addition, you may not get back the full amount of your initial investment 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.

Investment Focus: investment returns even if the FTSE falls 50%

Written by Tags: , , , ,

Last update: 27/09/2016

A defensive plan is simply a plan that is designed to provide an investment return even if the stock market fails to rise, or in some circumstances goes down slightly. They are therefore an option for those who would like the opportunity for investment level returns, but who are not confident the market will rise significantly in the medium term. The main feature of the Defensive Growth Plan from Investec is that returns are achieved even if the market has fallen by as much as 50% at the end of the fixed term. Here we take a closer look at the plan in order to find out why it has proved so popular with our investors.

The FTSE

Apart from a handful of days in 2015 and earlier this year, the closing level of the FTSE has been above 6,000 points since the start of 2013, and we have also seen the highest closing level on record (7,104 points), achieved towards the end of April last year. Whilst the FTSE has remained at what are historically high levels, defensive investment plans that offer the potential for investment level returns even if the stock market fails to rise or, in some scenarios, even falls slightly, have been an increasingly popular choice with our new and existing investors.

Defensive investments – a middle ground

Defensive investments attempt to offer investors the best of both worlds, by balancing less of the investment upside, with the opportunity to achieve these returns even if the market fails to rise. This means they are designed for investors who have a neutral or negative outlook of what could happen to the stock market in the coming years, and yet who would still like the opportunity to receive investment level returns. Based on the levels of the FTSE over the last few years, these arguably offer a compelling investment opportunity and Investec’s Defensive Growth Plan is one of our most popular.

In a nutshell

One of the latest additions to Investec’s highly competitive range of structured investment plans, the FTSE 100 Defensive Growth Plan offers a fixed return of 34% at the end of the six year term, provided the value of the FTSE at that point is equal to or higher than 50% of its value at the start of the plan (subject to averaging). Therefore, the FTSE can fall up to 50% and investors would still receive a 34% growth return, along with a full return of their original capital.

If the Index has fallen by more than 50% at the end of the term, no growth will be achieved and your initial capital will be reduced by 1% for each 1% fall, so you could lose some or all of your initial investment.

34% return even if the FTSE falls 50%

This is a strong headline since investors will receive a positive return, even if the FTSE falls 50%. This means that even if you are not confident the FTSE will rise at all, you could still receive a fixed return of 34% unless the FTSE falls by more than 50%.

The ‘defensive’ feature

Since the fixed return on offer is dependent on the performance of the FTSE 100 Index, the defensive element of the plan is an important one to understand. Rather than the Index having to finish higher than its value at the start of the plan, the Index can fall up to 50% and the fixed return of 34% is still paid. Whilst the FTSE continues at historically high levels, this ‘defensive’ feature could be an appealing one.

The use of averaging

Whether the plan pays the 34% fixed return is determined by comparing the value of the FTSE 100 Index at the start of the plan with its value at the end of the plan or the ‘Final Index Level’. When calculating the Final Index Level the plan takes the average of the closing levels of the Index on each business day during the last 6 months of the plan term. The use of averaging can reduce the adverse effects of a falling market or sudden market falls whilst it can also reduce the benefits of an increasing market or sudden increases in the market during the last six months of the plan.

Some capital protection from a falling market

Provided the FTSE 100 Index has not fallen by more than 50% at the end of the term, the 34% growth return is paid to you along with a full return of your initial capital. Should the Index have fallen by more than 50%, your initial investment is reduced by 1% for each 1% fall. It is important to note that in this scenario, you would lose at least 50% of your capital.

Since the market can fall up to and including 50% before your initial investment is at risk, the plan offers some capital protection against a falling market. This should be considered in conjunction with the potential return on offer when reviewing the plan’s overall risk versus reward.

Defined risk and defined returns

Another feature of this plan is that, as with all structured investments, the potential returns are stated up front, prior to investing. This allows the investor to consider the potential upside in the context of the amount of risk they are taking, since you know at the outset exactly what needs to happen in order to receive the stated level of growth as well as a return of your initial investment.

ISA only

Please note that this plan is only available as an ISA. The plan also accepts ISA transfers, from both Cash ISAs and Stocks & Shares ISAs.

Credit ratings and agencies

This plan is a structured investment and so your initial capital is used to purchase securities issued by Investec Bank plc. These securities are structured in a way so that they provide the growth and return of capital as described above, which means that Investec Bank plc’s ability to meet their financial obligations becomes an important investment consideration. If the bank fails or becomes insolvent, this could affect both the payment of any growth return as well as the return of your original investment and you would not be covered by the Financial Services Compensation Scheme for default alone.

Fitch is one of the main global credit rating agencies and has rated Investec Bank plc with a credit rating of BBB with a stable outlook (awarded 27th October 2015). The ‘BBB’ rating denotes a good credit quality and indicates that expectations of default risk are currently low and that Investec Bank plc’s capacity for payment of its financial commitments is considered to be adequate but adverse business or economic conditions are more likely to impair this capacity. The stable outlook indicates that the rating is not expected to change in the short to medium term, i.e. in the next 6 months to 2 years.

Investec Bank plc profile

Investec is an international specialist bank and asset manager with its main operations in the UK and South Africa. Established in 1974, they currently employ around 9,000 people and as at 31st March 2016, look after £121.7 billion of customer assets. They provide a range of financial products and services and specialise in a number of areas, particularly within the banking sector. Their banking operation looks after £24.0 billion of customer deposits and they are also a market leading provider of investment plans and structured deposits in the UK.

Fair Investment view

Commenting on the plan, Oliver Roylance-Smith, head of savings and investment at Fair Investment Company Limited, said: “The ability to produce a 34% fixed return even if the market falls by 50% puts this plan in a category of its own, since most other defensive investments still require the FTSE to fall by no more than 20%.The risk versus reward of the plan is known at the outset and is relatively easy to understand, whilst by offering a competitive return even if the FTSE falls by up to half this plan is one of our best selling defensive investments. So for those who are not confident the stock market will continue to rise in the coming years, this plan could make for a compelling opportunity.”

The plan is open for New ISA investments up to the £15,240 allowance for the current tax year (2016/17) as well as Cash ISA and Stocks & Shares ISA transfers. The minimum investment is £3,000.

 

Click here for more information about the Investec FTSE 100 Defensive Growth Plan »

 

No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

Tax treatment of ISAs depends on your individual circumstances and is based on current law which may be subject to change in the future. Always remember to check whether any charges apply before transferring or switching an ISA.

This is a structured investment plan that is not capital protected and is not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a risk of losing some or all of your initial investment. There is 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 addition, you may not get back the full amount of your initial investment 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.

Top 10 reasons to consider kick out investment plans

Written by Tags: , , ,

As at the end of last week, the range for the closing levels of the FTSE 100 Index over the previous 52 weeks was between 5537.0 and 6941.2, a difference of 1404.2 points. So whilst the UK’s index of leading blue chip companies remains as volatile as ever, there is one type of investment plan that continues to be a popular choice with our investors. Kick out plans offer a defined return for a defined level of risk, which combined with the opportunity to mature early mean they can offer a compelling opportunity in a wide range of investment climates.

Whilst many investors find it harder to commit when markets are seemingly more unpredictable than normal, or as has happened over the last couple of month has been on a relatively steady upwards trajectory, kick out investments remain popular regardless of what is happening to the stock market. With this in mind, we give you our Top 10 reasons to consider a kick out investment plan.

1.  Defined return, defined risk

With kick out plans the potential returns on offer, as well as what needs to happen to provide these returns, is known up front before you commit your capital – a defined return for a defined level of risk. The investor therefore has the benefit of knowing at the outset the conditions that need to be met in order to provide the stated returns. This allows the investor to consider the potential upside in the context of the amount of risk they are taking, which can then be used to make an informed decision about whether to invest or not.

2.  Early maturity

These plans have a maximum fixed term which is normally six years, but the term ‘kick out’ refers to their ability to mature early depending on the movement of the underlying investment (for example, the FTSE 100 Index). The potential to mature early is usually every 12 months after the start of the plan, with the first opportunity normally occurring at the end of year one or year two. If early maturity does occur, investors receive an attractive level of growth along with a full return of their initial capital. This structure has proved popular in all types of market conditions.

3.  Potential for high returns

In addition to the opportunity for early maturity it is no doubt the potential for high growth returns that also contribute to the ongoing popularity of kick out plans. With most plans offering high single digit or even double digit returns for each year invested (not compounded), the opportunity can be a compelling one, especially since what has to happen to the stock market in order to provide these returns is known at the very outset.

4.  Investment returns even if the market stays relatively flat

Most plans offer the ability to kick out at the end of each year provided the level of the underlying investment at that time is higher than its level at the start of the plan. So if you’re not convinced the markets will rise in the future, and yet still wish to achieve investment level returns, this can be a compelling investment story and is perhaps why this type of investment has proved particularly popular while the FTSE remains at what are historically high levels.

Click here to compare kick out investment plans »

5.  Potential to beat the market

Should a kick out plan be designed to mature early provided the level of the FTSE 100 Index (or other underlying investment) at the end of each year is higher than its value at the start of the plan, then provided the Index has gone up, even if this is by a small amount, you will receive the headline return along with a full repayment of your initial capital. In the scenario where the stock market has only risen by a very small amount, then it is likely that this type of investment would have outperformed the market. This may appeal to those investors who are not confident the market will rise significantly in the coming years, which seems to be a more popular sentiment when markets are at historically high levels.

6.  FTSE linked

Many kick out investment plans are linked to the performance of the FTSE 100 Index, which is widely recognised as the proxy benchmark for most investment managers in the UK. Since the historical volatility of this Index is familiar to many investors, they are in a better position to consider the pros and cons of the plan within the context of the underlying investment and the associated risks involved.

7.  Investment returns even if the market falls slightly

There are also kick out plans that will provide competitive growth returns even if the underlying investment falls slightly, for example up to 10% or 20%. These so called ‘defensive’ kick out plans thereby cater for an even wider range of investor views in terms of what could happen to the stock market in the coming years – the current range of defensive plans offering the potential for high growth returns even if the FTSE falls up to 20%. Again, whilst the FTSE has remained at historically high levels, this has proved to be a popular feature.

Click here to compare defensive kick out investment plans »

8.  Some capital protection from a falling market

Your original capital is returned if the plan kicks out but should this fail to occur, and no growth is achieved, typically your capital will be returned provided the underlying investment has not fallen below a certain amount. This amount is normally a percentage of its value at the start of the plan, usually in the region of 40% or 50%. To put this into context, for a plan which offers a return of capital unless the FTSE falls by more than 50%, then based on last Friday’s closing value of 6838.10, the Index would have to fall to a closing level of 3419.05 before your capital would be at risk, a level not seen since early 2003. However, if it does fall below 50% you could lose some or all of your initial capital. Please also remember that past performance is not a guide to future performance.

9.  No annual management charges

Unlike investment funds, the charges for creating and managing kick out plans are already taken into account so there are no annual management charges which come out of the headline return. The costs associated with the management of funds happens each and every year (in both actively managed and tracker funds), which may help to explain the number of funds which fail to outperform the FTSE 100 Index or other benchmark, especially over a five or six year period. This ongoing cost is not a feature of kick out plans. Most kick out investments will though have an initial charge, normally up to a maximum of 3%.

10. A disciplined approach

Finally, the mechanics of these investments removes the need for the investor to worry about when to come out of the market since the decision is made for them by the pre-determined market conditions required for the plan to mature or it simply comes to the end of the plan term. Should the plan mature, the investor then has the opportunity to reassess their options based on the market conditions at that time.

ISA friendly

All of the kick out plans offered through Fair Investment Company are available to individuals as a New ISA up to the current limit of £15,240 (2016/17 tax year) and will also accept transfers from both Cash ISAs and Stocks & Shares ISAs (as well as non-ISA investments). Since these investments are normally offered for a limited period, always note any New ISA or ISA transfer application deadlines.

Understand counterparty risk

One of the main differences with structured investment plans when compared with other types of investments, such as funds or investment trusts, is that your capital is used to purchase securities and it is these securities which are designed to produce the stated returns on offer. These securities are normally issued by a bank which means that your investment is held with a single institution rather than split between a number of companies, as it would be within an investment fund. This means the risk of the bank becoming insolvent and therefore unable to repay your original investment along with any stated returns becomes a factor to consider – this is known as counterparty risk. Since the counterparty is usually a bank, the credit rating is normally available so a view can be taken on the potential risk involved. There are also plans which aim to reduce this counterparty risk by spreading it across a number of institutions.

Latest selections

Kick out investment plans offer the potential for high returns balanced with conditional capital protection, with our latest selections offering a wide range of counterparties, collateralised versions as well as ‘defensive’ plans giving investors plenty of choice. We also have a number of kick out investments for our existing customers and those more experienced investors where you will find a range of dual Index plans which offer a higher risk versus reward, with current headline returns of up to 14% after 12 months.

 

Click here for our latest kick out investment plans »

Click here for our latest defensive kick out investments »

Click here for our experienced investor section »

 

No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

Tax treatment of ISAs depends on your individual circumstances and is based on current law which may be subject to change in the future. Always remember to check whether any charges apply before transferring an ISA.

Kick out investment plans are structured investment plans that are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a risk of losing some or all of your initial investment. There is 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 addition, you may not get back the full amount of your initial investment 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.

BREXIT and the FTSE: defensive investment plans rise to the challenge

Written by Tags: , , ,

Last updated: 11/10/2016

The recent decision made by the UK to leave the European Union has unsurprisingly forced many investors to reconsider their options, especially since there remains so much uncertainty around the potential impact of this decision on our economic growth and stability. Regardless of whether you were for remaining or leaving, taking a view on what might happen to the FTSE in the short to medium term is certainly something on the minds of many. With this in mind, we take a look at a selection of defensive investments to find out exactly what they have to offer and how the risk versus reward might be appealing for those who are concerned about the impact Brexit may have on future investment opportunities.

What is a defensive plan?

Defensive plans offer the potential for investment level returns, even if the stock market goes down, in some cases by up to 50%. Partly as a result of the FTSE continuing at historically high levels in recent years, there has been an increase in the number of plans that offer a competitive return even in the event that the market fails to rise. These are commonly known as defensive investment plans and for those who are not confident that the market will continue to rise in the medium term, they have become an increasingly popular investment opportunity.

Different types

Although each plan has its own features, collectively they are growth investments which offer the potential for either a fixed return for every year invested (not compounded), or a fixed return at the end of the full term, both of which are dependent on the performance of the underlying investment, usually the FTSE 100 Index. Each of these investments will be structured to offer a defined return for a defined level of risk, and as such you will know from the outset exactly what must happen in order to receive the stated returns on offer.

A middle ground

Defensive investments therefore try and offer the best of both worlds by offering the potential for investment level returns, even if the underlying investment only rises by a small amount, stays flat, or goes down slightly. This means they are designed for investors who have a neutral or negative outlook of what could happen to the stock market in the coming years, and yet who would still like the opportunity to receive the potential for investment level returns. Here is a selection of the current range of defensive plans on offer:

Returns even if the FTSE falls up to 10%

If the FTSE had fallen by 5% in 3 years time and yet you still received 24.0% growth plus a return of your initial capital, would you consider this a good investment? The Investec FTSE 100 Defensive Kick Out Plan has a maximum term of six years but will kick out (mature early) at the end of each year from year 3 onwards, provided the FTSE is above 90% of its value at the start of the plan. If it is, then you will receive 8.0% for each year invested (not compounded). If the Index has fallen by 10% or more, your investment continues.

If the plan does not produce a return, your initial capital is returned in full unless the Index has fallen by 50% or more, measured at the end of the plan term. If it has, your capital will be reduced by 1% for each 1% fall and so you could lose some or all of your initial investment.

Returns even if the FTSE falls up to 20%

Our next defensive plan is another kick out plan, the FTSE Defensive Kick Out from Focus, and will kick out and return your initial investment along with 7.15% for each year invested (not compounded) provided the FTSE 100 is at the required level at the end of each year, from year 2 onwards. The required level is 100% of its starting value at the end of year two, reducing by 5% in each of the following years down to 80% in the final year. So the FTSE could fall up to 20% and you would still receive 7%+ returns on your investment.

If the Index closes below the required level each year, no growth return will be paid and your initial capital will be returned in full unless the FTSE has fallen by more than 40% at the end of the term. If it has, your initial investment would be reduced by 1% for each 1% fall, and so you could lose some or all of your investment.

Returns even if the FTSE falls up to 50%

Our final defensive investment is the Investec FTSE 100 Defensive Growth Plan, which offers a fixed return of 34% at the end of the investment term provided the value of the FTSE is more than 50% of its value at the start of the plan (subject to averaging). Therefore, the FTSE can fall up to 50% and investors would still receive a 34% growth return, along with a full return of their original capital. The 34% return is equivalent to 5.0% compound annual growth.

If the Index has fallen by 50% or more at the end of the term, no growth will be achieved and your initial capital will be reduced by 1% for each 1% fall, so you could lose some or all of your initial investment.

Fair Investment view

Commenting on defensive investment plans, Oliver Roylance-Smith, head of savings and investments at Fair Investment Company said: “Despite the recent volatility in the FTSE the Index currently remains at historically high levels, but for those investors who are not confident that the market will rise in the medium term, knowing that you can achieve investment returns regardless of whether the market goes up, remains flat, or even falls slightly, could be an attractive opportunity.”

He continued: “Markets don’t like uncertainty, and so it is understandable that investors are going to consider, perhaps more than normal, the potential impact of leaving the EU on the FTSE in the medium term. Since the market can fall up to 40% before your initial investment is at risk, defensive plans also offer some capital protection against a falling market, and allow potential investors to consider the risk versus reward of the plan prior to investing, which could be appealing in the current investment climate.”

 

More information on the Investec FTSE 100 Defensive Kick Out Plan »

More information on the Focus FTSE Defensive Kick Out Plan »

More information on the Investec FTSE Defensive Growth Plan (ISA only) »

Click here to compare defensive investment plans »

 

No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

Tax treatment depends on your individual circumstances and is based on current law which may be subject to change in the future. Always remember to check whether any charges apply before transferring an ISA.

These are structured investment plans that are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a 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 addition, you may not get back the full amount of your initial investment 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.

Investment Focus: Investec Enhanced Kick Out Plan

Written by Tags: , , , ,

Last updated: 16/08/2016

A kick out investment is a fixed term investment plan that has the ability to mature early or ‘kick out’ each year, providing a fixed growth return along with a full repayment of your initial capital. Since these plans can produce competitive returns even if the market stays relatively flat, these investments seem to be popular in a wide range of market conditions. The current issue of the Enhanced Kick Out Plan from Investec offers the highest rate of any kick out investment based on the performance of the FTSE 100 Index, which perhaps helps to explain why it is one of our most popular investments with both our existing customers as well as new investors.

Here we take a closer look at the main features of the plan and review the risk versus reward on offer to see how this might make for an attractive opportunity in the current investment climate.

In a nutshell

The plan will return 9.50% per year (not compounded) provided the value of the FTSE 100 Index at the end of each year is higher than its value at the start of the plan – so although the FTSE does have to rise, this only needs to be by a single point. Should the plan kick out, your initial investment is also returned in full. If the plan does not kick out, your initial capital is at risk if the Index falls by more than 50% during the term, and also finishes below its starting value, in which case your capital will be reduced by 1% for each 1% fall.

Early maturity

The term ‘kick out’ refers to the ability of the investment plan to mature early depending on the performance of the FTSE 100 Index. Plans such as these that have the ability to mature early and provide a competitive level of growth have proved popular in recent years with a range of investors. For example, the fact that this plan can achieve investment level returns even if the market stays relatively flat means that investors have the potential to outperform the market. This scenario may appeal to those who are not confident the market will rise strongly in the coming years.

The potential for high returns

In addition to the opportunity for early maturity it is no doubt the potential for double digit returns that have added to this plan’s popularity. The headline return on offer from the current issue is 9.50% annual growth. The return is not compounded, but will be paid to you for each year the investment has been in place, thereby offering compelling returns even if the FTSE stays relatively flat or only rises by a small amount. If the plan does kick out, your initial capital is also returned to you in full along with the growth payment.

Some capital protection from a falling market

The Enhanced Kick Out Plan also includes what is known as conditional capital protection, which means that if the plan fails to kick out by the end of the six year term, the return of your initial investment is conditional on the FTSE not falling by more than 50% of its starting value. If the FTSE stays within this 50% barrier throughout your investment then you will receive a full return of your original investment.

If the Index falls more than 50%, and also ends the term at a level which is lower than its value at the start of the plan, your initial investment will be reduced by 1% for every 1% fall. In this situation there is a risk that you could lose some or all of your capital.

Defined risk and defined returns

Another feature of this investment is that the potential returns are stated up front, prior to investing. This allows the investor to consider the potential upside in the context of the amount of risk they are taking, since you know at the outset exactly what needs to happen in order to achieve the growth returns on offer, as well as a return of your initial investment.

Risk versus reward

The principle of risk versus reward inevitably leads to putting your capital at risk in the search for potentially higher returns. A good benchmark for assessing any investment is to compare what you could get from a fixed rate deposit over a similar timeframe, and then consider whether you are comfortable with the additional risk you are taking in order to receive the potential for a higher return.

Leading longer term fixed rates are currently offering around 2.20% and so by accepting risk to your capital, you are potentially increasing your returns by around 7.30% a year if the plan matures early or produces a return in the final year. The decision is therefore whether you are comfortable with putting your capital at risk and the conditional capital protection offered, in order to have the potential for this level of growth.

Credit ratings and agencies

Another important feature of this plan is that your investment is used to purchase securities issued by Investec Bank plc and which are designed to produce the stated returns on offer based on the performance of the FTSE. This means that Investec’s ability to meet their financial obligations becomes an important consideration. Fitch is one of main global credit rating agencies and Investec Bank plc has a credit rating of BBB with a stable outlook (awarded 27th October 2015).

The ‘BBB’ rating denotes a good credit quality and indicates that expectations of default risk are currently low, although adverse business or economic conditions are more likely to impact than a bank with a higher rating. The stable outlook indicates that the rating is not likely to change in the short to medium term, i.e. in the next 6 months to 2 years.

Investec Bank plc

Investec is an international specialist bank and asset manager with its main operations in the UK and South Africa. Established in 1974, they have approximately 8,500 employees and provide a diverse range of financial products and services, specialising in a number of areas particularly within the banking sector. They are also a market leading provider of investment plans and structured deposits.

ISA friendly

In addition to non-ISA investments, this investment has been one of our most popular with ISA investors and is available as a New ISA up to the current limit of £15,240 (2016/17 tax year), and also accepts transfers from both Cash ISAs and Stocks & Shares ISAs. Please check the plan details for any application or transfer deadlines that apply. The minimum investment is £3,000.

Fair Investment conclusion

Commenting on the plan, Oliver Roylance-Smith, head of savings and investment at Fair Investment Company Limited, said: “One of the main reasons investors consider kick out investments is that they can offer the potential for high growth and a full return of capital in as little as 12 months, even if the stock market stays relatively flat or only rises by a small amount. In both of these scenarios, this type of investment offers the potential to beat the market.”

He continued: “Investec’s plan is our most popular kick out investment, offering the potential to kick out at the end of each year and achieve 10.0% growth for each year invested. So depending on your view of what will happen to the FTSE in the coming years, the potential for double digit growth along with a full return of capital, could be considered a good return on your investment in the current climate.”

Click here for more information about the Investec Enhanced Kick Out Plan »

 

No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek professional advice.

Tax treatment of ISAs depends on your individual circumstances and is based on current law which may be subject to change in the future. Always remember to check whether any charges apply before transferring an ISA.

This is a structured investment plan that is not capital protected and is not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a risk of losing some or all of your initial investment. There is 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 addition, you may not get back the full amount of your initial investment 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.

Our 10 best last minute ISA ideas

Written by Tags: , , , , , , ,

With just one week to go until the deadline for using your 2015/16 ISA allowance of £15,240, this really is your last opportunity to make use of this valuable tax break and help protect your returns from the taxman. If you are yet to make use of some or all of your allowance, here we give you our 10 best last minute ISA ideas. Including both Cash ISA and Investment ISAs, as well as opportunities where you can include your 2016/17 ISA allowance (£15,240) as well, there should be something for everyone.

1.   Our best-selling Investment ISA

For those looking for growth but also with the opportunity to mature early or ‘kick out’ each year, the Enhanced Kick Out Plan offers 11.50% for each year invested provided the FTSE 100 Index at the end of each year is higher than its value at the start of the plan (subject to averaging). Capital is at risk if the FTSE falls by more than 50%. This is our best selling Investment ISA during the current ISA season and also features a Double ISA option.  Click here for more information »

2.   Fixed income Investment ISA

The Enhanced Income Plan is a regular ISA season top seller, paying a fixed income of 5.28% per year regardless of what happens to the stock market. The plan also has monthly income payments, so you know exactly how much you will paid, when, and for how long. Capital is at risk if the FTSE 100 Index falls by more than 50%. This plan features a Double ISA option.  Click here for more information »

3.   Self-select Investment ISA top seller

Barclays Stockbrokers has been voted ‘Best Execution-Only Broker’ at the Shares Awards 2015 whilst they have also been voted Self Select ISA Provider of the Year 2016 at the ADVFN International Financial Awards. Their investment ISA offers over 2,000 funds as well as a wide range of other investments including shares, exchange traded funds, investment trust, gilts and bonds.  Click here for more information »

4.   Defensive Investment ISA best seller

The Defensive Growth Plan from Investec offers a fixed return of 36% (equivalent to 5.25% compound annual growth) plus a return of your original capital, provided the FTSE 100 Index has not fallen by 50% or more at the end of the investment term. If it has, no growth will be achieved and your capital will be reduced by 1% for each 1% fall. This plan also features a Double ISA option.  Click here for more information »

5.   Income Investment ISA top seller

The FTSE Quarterly Contingent Income Plan pays a quarterly income of 1.875% for each quarter the FTSE 100 Index does not end less than 25% below its value at the start of the plan. So even if the FTSE falls up to 25% each quarter, you would still achieve 7.50% annual income. Capital is at risk if the FTSE has fallen by more than 40% at the end of the investment term. This plan features a Double ISA option.  Click here for more information »

6.   Managed and regular saver Investment ISA

The Standard Life Stocks & Shares ISA includes their ‘Easy Option ISA’, which allows investors to invest in one of their MyFolio Managed Funds run by a team of experts at Standard Life Investment Ltd. You can manage your account online and your ISA can be opened from just £50 per month with transfers from other ISAs permitted.  Click here for more information »

7.   Defensive supertracker Investment ISA

Defensive plans remain popular and the FTSE Defensive Supertracker from Meteor tracks any growth in the FTSE during the plan term and then trebles it, subject to a maximum growth return of 60%. The plan is defensive since the growth is based on any rise above 80% of the FTSE’s value at the start of the plan – that’s a 60% return even if the FTSE ends the same. Capital is at risk if the FTSE has fallen by more than 40%. This plan also features a Double ISA option.  Click here for more information »

8.   Instant access Cash ISA

For savers looking to combine a top interest rate with access to their money at all times, the Easy Access ISA from AA offers a simple, bonus-free savings rate of 1.25% AER variable. The account can be opened and managed online with just £100 and there are unlimited free withdrawals. The account also accepts transfers in. There are no penalties, notice periods or tiered interest rates, whilst interest is calculated daily and paid in March each year.  Click here for more information »

9.   Fixed rate Cash ISA

If you are looking for the reassurance of a fixed savings rate and don’t need access for your money for at least a year, fixed rate Cash ISAs are a popular option. The 1 Year Fixed Rate Cash ISA from AA currently offers 1.35% AER fixed and can be opened with a single deposit of £500. The account also accepts transfers in. Withdrawals are not permitted and 90 days loss of interest will apply if you access your money during the fixed term. You can apply and manage your account online whilst interest is calculated daily and paid at the end of your 12 month fixed rate period.  Click here for more information »

10.  Help to Buy Cash ISA

First time buyers can benefit from a 25% bonus of their Help to Buy ISA balance with a minimum bonus of £400 (so you need at least £1,600 saved) and a maximum of £3,000 (on a savings balance of £12,000) although you can have more saved. That means for every £200 you save HM Government will add £50, up to a maximum of £3,000. Eligibility criteria and Help to Buy: ISA Scheme Rules apply. Also note that any funds withdrawn before closing the account will not count towards the Government Bonus. The Nationwide Help to Buy: ISA is currently offering 2.00% AER variable with a minimum opening balance of £1.  Click here for more information »

 

Click here to compare Cash ISAs »

Click here to compare Investment ISAs »

Click here to compare our Top 10 Investment ISA plans »

 

No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. Fair Investment Company does not offer advice and any investment transacted through us in on a non-advised basis. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

The value of investments and income from them can fall as well as rise and you may not get back the full amount invested. Different types of investment carry different levels of risk and may not be suitable for all investors. The past performance of the FTSE 100 Index is not a guide to its future performance.

Some of the investments mentioned are structured investment plans that are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a risk of losing some or all of your initial investment. There is 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 addition, you may not get back the full amount of your initial investment if the plan is not held for the full term.

Tax treatment of ISAs depends on your individual circumstances and is based on current law which may be subject to change in the future. ISA transfer charges may apply, please check with your provider.

2016 ISA season selections – our Top 5 Investment ISAs

Written by Tags: , , , , ,

With well under a month to go, time is running out to maximise the valuable tax benefit of your ISA allowance before the deadline on 5th April 2016, otherwise it will be lost forever. This has already been a very busy ISA season, and with Cash ISA savings rates continuing at uninspiring levels, it is perhaps not surprising that last season’s rise in the number of Stocks & Shares ISAs is a continuing trend. With the need to review existing ISAs, as well as making sure any new ISA investments offer the opportunity for competitive returns, we bring you our most popular Investment ISAs.

Our Top 5 Selections

Below we have listed some of our most popular Investment ISA plans, featuring both income and growth investments. With income needs continuing to play a critical role for many investors, the attraction of having tax free income is understandable. Whilst for investors looking for growth, included are those plans which take a defensive view on the stock market, as well as investments with the opportunity to mature early or ‘kick out’. Our head of savings and investment, Oliver Roylance-Smith, also offers a Fair Investment view for each plan.

Your ISA allowance

The ISA allowance for the current tax year is £15,240, whilst all of the plans detailed below accept Cash ISA and Stocks & Shares ISA transfers. Each plan also offers a Double ISA option, whereby you can invest the current tax year ISA allowance and next tax year’s ISA allowance (2016/17 tax year ISA allowance is also £15,240) via one application form – thereby offering the opportunity to invest up to £30,480 into new ISAs. Please check the individual plan for further details and for any application deadlines that apply.

Potential for 11.50% annual growth

With the potential for double digit returns and the opportunity to mature early from year one onwards, the Investec Enhanced Kick Out Plan has been our best selling Investment ISA this year. The plan will return 11.50% annual growth (not compounded) provided the value of the FTSE 100 Index at the end of each year is higher than its value at the start of the plan (subject to averaging). Your initial capital is at risk if the Index falls by more than 50% during the term, and also finishes below its starting value, in which case your capital will be reduced by 1% for each 1% fall.

Fair Investment view: “Depending on your view of what will happen to the FTSE, the ability to achieve 11.50% annual growth, even if the Index stays relatively flat, perhaps helps to explain why this plan has proved so popular. The current issue also sees the highest potential return on offer from this plan since 2012, so if the combination of high growth returns, the ability to mature early, as well as some capital protection against a falling market sounds appealing, this might make for a compelling opportunity in the current investment climate.”

Click here for more information »

 

Up to 7.50% annual income

The FTSE Quarterly Contingent Income Plan from Focus offers a quarterly payment of 1.75% during the plan if at the end of each quarter, the value of the FTSE 100 index has not fallen more than 25% from its value at the start of the plan. Therefore, the Index can fall up to 25% at the end of each quarter and you would still receive 7.50% annual income, but if the Index falls by more than this, no income would be paid for that quarter.

Your initial investment is returned at the end of the plan provided the FTSE has not fallen by more than 40%, measured at the end of the fixed term only. If it has fallen below this level, capital will be reduced by 1% for each 1% fall, so you could lose some or all of your initial investment.

Fair Investment view: “Those seeking income from their investments often put the potential yield and frequency of payments as their top priorities, so the headline yield of up to 7.50% is attractive and the cap on any income is balanced against the conditional capital protection thereby offering an attractive balance of risk v reward. It’s has been a while since we’ve been able to talk about the potential for up to 7.50% income from a plan based on the performance of the FTSE, and compared to other income alternatives available in the market, this plan could offer an attractive option.”

Click here for more information »

 

5.28% fixed income each year

Our next plan is from Investec and is our best selling income investment this year, for both ISA and non-ISA investors. The current issue of the Enhanced Income Plan pays a fixed income of 5.28% per year, with monthly payments of 0.44% paid to you regardless of the performance of FTSE.  Capital is at risk if the FTSE falls by more than 50% during the investment term. If it does, and the Index also finishes below its starting level then your original capital will be reduced by 1% for each 1% fall, so you could lose some or all of your original investment.

Fair Investment view:One of the attractions of an ISA is that it allows income to be generated that would otherwise be subject to income tax, whilst the Enhanced Income Plan offers a high fixed income that is paid to you regardless of the performance of the stock market. Knowing exactly how much you will be paid, when and for how long are clearly features that could appeal, whilst the monthly payment frequency is usually the most sought after. The combination of a regular fixed income and a return of capital unless the FTSE 100 Index falls by more than 50%, could offer a competitive balance of risk versus reward that might be considered by both savers and investors.”

Click here for more information »

 

36% return even if the FTSE falls up to 50%

Defensive plans offer investors a competitive return on their capital even if the stock market fails to go up. As a result, they have risen in popularity in the last few years and the recently launched Defensive Growth Plan from Investec is no exception. The plan offers a fixed return of 36%, provided the FTSE 100 Index at the end of the term, is more than half of its value at the start of the plan (subject to averaging). So the FTSE can fall up to 50% and you still receive a fixed growth return of 36%, equivalent to 5.25% compound annual growth. If the FTSE falls by 50% or more, no growth will be achieved and your initial capital will be reduced by 1% for each 1% fall, so you could lose some or all of your initial investment.

Fair Investment view: “Whilst the FTSE continues at what are still historically high levels, it is understandable why many investors are considering defensive investment plans and with a product headline of a 36% growth return unless the FTSE 100 Index falls by 50% or more, the risk versus reward of this plan is relatively easy to understand. So depending on your view of what might happen to the FTSE in the medium term, the ability to produce over 5% compound annual growth provided the market does not fall 50%, could make for an innovative investment opportunity.”

Click here for more information »

 

Triple the rise in the FTSE above 80% of its starting value

Following this defensive theme is our most popular ‘supertracker’ plan, the FTSE Defensive Supertracker from Meteor. The ‘supertracker’ part means your investment tracks any growth in the FTSE 100 Index during the term of the plan and then triples it, whilst the plan is ‘defensive’ since this growth is based on any rise above 80% of the FTSE’s starting value. Therefore, provided the FTSE has not fallen by more than 20%, you will receive triple any growth, subject to a maximum return of 60%. Therefore, this maximum return is achieved provided the FTSE ends the same or higher than its value at the start of the plan.

If the FTSE has fallen by more than 20%, no growth will be paid and your original investment will be returned in full unless the FTSE has fallen by more than 40%. If it has, your capital will be reduced by 1% for each 1% fall, so you could lose some or all of your initial investment.

Fair Investment view: “For those investors concerned about the historically high level of the FTSE and would therefore like to include a defensive element to their investment, this plan offers the opportunity for investment level returns not only if the FTSE goes up, but also if it stays flat or even goes falls up to 20%. By combining this with some capital protection should the stock market fall, this plan could offer a compelling balance of risk versus reward for those who are not confident that the FTSE will rise significantly in the medium term.”

Click here for more information »

 

Important reminder – why do an ISA?

One of the main reasons for using an ISA is it’s tax treatment since no tax is payable on the income you receive, or any capital gains that you make, and there is also no need to declare any ISA income or capital gains on your tax return. They therefore provide tax efficient income or growth on your investment, the benefit of which can be compounded over time. See our Top 10 Tips for ISA season for further help and tips on how to make the most from this important time of year. Please also note that with all of these investments, our experienced Investment Customer Services team is available on 0845 308 2525 to answer any questions you may have.

How to apply

When you click for more information on any of the above plans you will be able to request a brochure pack which will be sent to you by post and email. This will include everything you need to invest, whether applying for an ISA, transferring existing Cash ISAs and/or Stocks & Shares ISAs or making on-ISA investments. Also note that these plans have different application deadlines, and may also close early so it is important to submit your application as soon as possible. Minimum investments and arrangement fees also apply.

Click here to compare Investment ISAs »

 

No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular investment. If you are at all unsure of the suitability of a particular investment, both in respect of its objectives and its risk profile, you should seek independent financial advice.

Tax treatment depends on your individual circumstances and is based on current law which may be subject to change in the future. Always remember to check whether any charges apply before transferring an ISA.

These are structured investment plans which are not capital protected and are not covered by the Financial Services Compensation Scheme (FSCS) for default alone. There is a risk of losing some or all of your initial investment. There is 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 addition, you may not get back the full amount of your initial investment 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.