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Blue Sky launches two auto-call plans for investors

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Blue Sky Asset Management, a structured investment specialist, is launching two new plans for investors that provide automatic early closure opportunities.

Blue Sky Asset Management, a structured investment specialist, is launching two new plans for investors that provide automatic early closure opportunities.

Both plans twist the familiar structured investment ‘auto-call/kick-out’ theme to offer investors solutions to low interest rates and alternatives to traditional mutual funds, especially equity income and corporate bond funds.

The High Income Corridor Auto-Call Plan II offers investors the potential for continuing income payments of 4.5 per cent (nine per cent + pa), on a six-monthly basis, based upon the FTSE 100 Index remaining in a corridor of 85 per cent  to 105 per cent of its starting level at each six-month point.

If the index rises above 105 per cent of its starting level, at any six-month point, the plan will close early repaying capital in full and making a final income payment.

It has been designed to provide a short-term income solution to low interest rates, and an alternative to traditional mutual funds while the stock market is going sideways, or falling by up to 15 per cent.

If the market moves up by more than five per cent, the plan ‘auto-calls’, allowing fresh client advice to be offered by advisers in light of a changed market environment.

The plan provides nine opportunities to close early. However, if it does not auto-call during the investment term investors benefit from 100 per cent capital protection contingent upon the FTSE-100 being at or above 50 per cent of its starting level in 2014.

The Capital Accumulator Auto-Call Plan – Defensive Series IV is a six-year growth plan offering the potential for 15 per cent growth at the end of the second year based upon the condition that the FTSE-100 is at or above 90 per cent of its starting level.

If the plan does not auto-call at year two, growth accumulates at 7.5 per cent a year for the duration of the investment term with the same defensive index condition applying at each anniversary.

The plan offers four opportunities to close early and, like the High Income Corridor Plan, if it has not auto-called during the investment term, 100 per cent capital protection is provided at maturity, contingent upon the FTSE-100 being at or above 50 per cent of its starting level in 2015.

The plans are open with immediate effect and will close to new business on 3 July, with the deadline for Isa transfers on 19 June, unless over-subscribed.

Chris Taylor, chief executive at Blue Sky Asset Management, says: ‘At a time when investors need reliable income and growth options, but face serious dilemmas in finding either these plans are designed to meet their needs and deliver positive income or growth returns even if the market goes sideways or falls.

‘Interest rates are now at historically low levels whilst at the same time many investors feel uncomfortable with traditional investment fund options. We believe that equity income funds and corporate bond funds are likely to suffer in the current environment, as dividends are increasingly under pressure and the ongoing recession increases the likelihood of bond defaults, whilst the threat of inflation further ahead is yet to take its toll. Yet viable alternatives are difficult to find.

‘Both new Blue Sky plans are specifically designed to deliver successful income or growth under the current conditions, with defensive features that allow for the market to fall from current levels, whilst automatic early closure opportunities provide the flexibility for new portfolio advice when conditions stabilise.’

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