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R853 Dawnay Day Quantum European Stockmarket Maximiser III
Product
type: SCARPS growth (capital not
protected)
Product
summary:
This is a six-year investment linked to
the DJ Eurostoxx 50. The product pays ten times index growth
up to a return of 60%. Further potential returns can be earned
via a 150% participation rate if the index rises by more than
60%. Capital is protected at maturity unless a 50% protection
barrier is breached at any close of business level during the
product term.
| Points for: |
| 1. Ten times index growth is paid for first 6% of
index rise |
| 2. Participation of 150% uncapped in any growth
above 60% level |
| 3. According to the product literature gains made
outside tax-free shelters are subject to CGT |
| |
| Points against: |
| 1. Capital is not protected at maturity if the 50%
protection barrier is breached |
| 2. Final level averaging can constrain growth in a
rising market | |
|
Asset exposure period 6 years
Full term length 6.06 years
Underlying Asset
DJ Eurostoxx-50
Final index
level defined as monthly averaging over the final six
months.
Market barrier
levels 50% of initial index level.
Investment Limits: Minimum for direct
investment £15,000, Minimum for Maxi ISA and ISA/PEP transfers
£7,000.
Commission:
3.5%
Wrappers and investment
vehicles: Corporate/Commercial, Direct Investment, ISA,
ISA/PEP transfer, Offshore Investment, SIPP/SSAS, Trustees of
a trust
Tax treatment outside a
tax-free wrapper
(according to information from the
product provider): CGT.
Credit rating of investments made
(according to information from the product
provider): S&P's AA or better.
|
| Offer
period: |
Opens |
Transfers by |
Closes |
|
21/01/2008 |
15/02/2008 |
29/02/2008 |
| |
| Key
dates: |
Strike set |
Final market
reading |
Maturity/payout |
|
14/03/2008 |
14/03/2014 |
21/03/2014 | | |
Product description:
This is a six-year investment linked to the DJ Eurostoxx 50.
The product pays ten times index growth up to a return of 60%.
Further potential returns can be earned via a 150% participation
rate if the index rises by more than 60%. Capital is protected at
maturity unless a 50% protection barrier is breached at any close of
business level during the product term.
If the final
averaged index level is above the initial level then the potential
return comes from two components. Ten-times geared returns for the
first 6% of index rise will give a return of up to 60%. No further
return will be earned if the final index level finishes between 106%
and 160% of the initial level. If in fact the final level is above
160% then a further return of 150% of the rise beyond 160% is
received uncapped. The product is structured to return at least as
much as the index capital return in all circumstances and can
outperform it significantly.
We illustrate this payoff
profile by way of examples: If the index rises by 5%, the investor
receives a return of 50% (5 times 10). If the index rises by 7% (or
any number between 6% and 60%), the investor receives a 60% return.
If the index rises by 80%, the investor receives a return of 60% +
(80 - 60) x 150% = 90%.
The final level of the index is the
monthly average over the final six months of the investment (7
observations). While final level averaging protects the investor
from any late falls in the market, it can constrain growth in a
rising market.
Capital is not protected at maturity if the
closing level of the index is less than 50% on any day of the
investment, thereby breaching the soft protection barrier. If the
barrier is not breached the investor receives the full return of
capital even if the final index level is below the initial index
level (but not by more than 50%). If the barrier is breached the
amount of capital returned to the investor depends on the final
level of the index, i.e. capital is lost at a rate of 1:1.
Typically on accelerated 'recovery' products the barrier can
be breached based on intra-day levels and the final level is the
closing level on the final day of investment. The barrier on this
product can only be breached on daily closing levels which reduces
the chance of the barrier being breached. The final level on this
product is averaged monthly over six months. If the index is down
then averaging will usually reduce downside risk but if the index is
up it may reduce potential returns.
This investment would
therefore appeal to investors looking for potential enhanced returns
on small to moderate market gains with potential to earn further
returns if markets perform strongly, and who are willing to accept
some risk to capital.
The product is open to ISA investment,
ISA/PEP transfers and direct investment. According to the literature
returns on direct investment for individuals are subject to capital
gains tax. The product is also open for SIPP and SSAS investment.
|
This
product was assessed as follows:
(to see
details about the scoring system, riskmap and
probabilities please see Research
methodology explained) |
Higher plus 8.5/10
Higher 7.5/10
Basic plus 8.25/10
Basic 7.5/10
Non tax
payer 7.75/10
The riskmap rating is 3.27 |
To compile the overall scores
this
product scored as follows
in our different
categories:
Transparency 8/10
Value
8.13/10
Returns 7.22/10 |
Probability table of product return
outcomes (based on simulated performances)
|
|
|
Outcome range (p.a.) |
Probability (total
return) |
| less than -5% |
|
| -5% to 0% |
|
| 0% to 5% |
|
| 5% to 10% |
|
| 10% to 15% |
|
| greater than 15% |
|
|
| |
|
| | | |
|
Information from the product
provider:
Future Value Consultants Limited does not
control external sites and accepts no responsibility for the content
contained therein.
Here is a link to the product provider
you may find of interest: Dawnay
Day Quantum homepage
You can email the product
provider direct from here about this product: IFA
queries
Contact details for
Dawnay Day Quantum
| Telephone: 020 7861 0900 |
Fax: 020 7861 0905 |
| Contact: Kelly Belford |
| 9-11 Grosvenor Gardens |
| London SW1W 0BD | |
Report published 15-1-2008 by Future Value
Consultants Limited. © Copyright
Future Value Consultants Limited 1999-2008. All rights reserved. No article may be reproduced in
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Future Value Consultants Limited.
IFAs may use this report for research purposes when
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