NDF Administration has launched a five-year equity growth product with early redemption opportunities each year. NDF will purchase one-year knock-out call options on the FTSE 100 from Abbey Financial Products to structure the product. The instrument matures early if the index is the same or higher than its starting level on each anniversary of investment, according to Simon Harvey, marketing manager at NDF in St Albans, U.K. In the case of early redemption, the investor receives 8% growth for each year invested, but if the structure lasts its full term the investor receives 100% of the growth of the index. Investors get 100% of their principal back provided the index does not fall by more than 50%.
Mehdi Kadhim, equity derivatives marketer at Abbey in London, noted the annual early redemption feature makes the product look more like an income than a growth structure, which appeals to clients looking for annual returns. Harvey added, "The potential is there for an 8% per annum return, which we think is appealing in these market conditions."
