Legal & General is launching its first equity-linked investment product with the possibility of early knock-out Monday. The insurer, which markets products through financial advisors to retail investors, has previously structured straight FTSE 100 participation notes. Jamie Vale, a director in the structure product team, said it put together the latest growth investment plan because of feedback from IFAs which suggested investors want to avoid tying up money for a long period.
The structure is referenced to the FTSE 100 and can knock out on its third, fourth or fifth anniversary providing the index is 15%, 20% or 25% up on its initial level. If the note knocks out in year three, the investor receives capital invested plus 22%. In year four this is 27% and in year five, 32%. If there is no early redemption, the investment continues to its six-year term, returning investors 100% of their capital and 100% participation in any index growth.
Vale said the note, which strikes March 8, has been hedged with Abbey Financial Markets. Abbey tends to offer better prices and services than bigger-bank rivals for FTSE-linked options, he added.
