Gilliat launches FTSE 100 product with ‘locked-in’ payments

Gilliat Financial Solutions has launched the second product in its Captured Growth Series. The FTSE 100 index linked note offers potential returns of 52.5% over five years and gives investors the opportunity to capture growth in the third, fourth and fifth year.

"This is a repeating product – we closed the first product and the second opened the same day," says Adrian Neave, managing director at Gilliat in London. "Rates and volatility have meant that returns on the second tranche are not as good as on the first, but a potential return of 52.5% over five years is not unreasonable," he adds.

The digital option has been split over three years giving investors a ‘locked-in' payment of 17.5% if the FTSE 100 is equal to or higher than the strike value. "We have split the product so that we don't just have a single observation at one time. We have increased the probability of getting a return and split the digital option into three different parts over three years," says Neave.

The product is not capital protected but 60% soft protection and a European barrier reduces risk. "We look at the level of the index only on the strike date and the maturity date, so even if the market falls below the capital protection barrier during its lifespan, it won't be accounted for as long as it finishes above the barrier level," he says.

The notes are issued by Morgan Stanley.