Barclays Wealth adds ‘Reserve’ feature to Target Growth Plan

Barclays Wealth has reissued its Target Growth Plan with a new option giving investors an additional safety barrier for their capital.
Available now, the five-year plan has two distinct risk/reward investment options. The Standard option will give investors a fixed return of 47.5% plus full repayment of capital at maturity providing that the FTSE 100 does not fall below 60% of its strike level during the term. Should this happen, both the return and investors’ capital would be lost 1:1 with the index.
The new Reserve option will return 40% plus investors’ capital in full at maturity providing that the Index does not drop below 60% of its strike level during the term. However should the FTSE 100 drop below this barrier level, neither the return nor capital is immediately at risk because of the existence of the feature called the ‘Reserve’.  With the Reserve the 60% barrier is observed at set points each month, and should the FTSE 100 breach the barrier on any of these observations, the equivalent percentage will be exhausted from the Reserve. Only when the Reserve has been depleted with investors’ capital and return become potentially at risk.
For example, if at an observation point the FTSE 100 is standing at 50% of its strike level, the Reserve will lose 10%; if at the next observation point, the Index stands at 55% of its starting level, a further 5% will be taken out of the Reserve, leaving a total of 85%. If the FTSE 100 returns to a level above the 60% barrier level, then the Reserve will cease to be depleted. Only when 100% has been taken from the Reserve will investors’ return and capital be at risk. Should this happen, both the return and investors’ capital would be lost 1:1 with the index performance.
Full details of the product can be found at http://www.barclayswealthprotectedinvestments.com.
Lisa Chaudhuri, vice president, Barclays Wealth, says: “Our new TGP offers investors a clear distinction between risk and reward with the Standard option offering the higher potential return with a higher risk profile to capital in comparison with the Reserve option which offers an additional risk mitigation feature, the cost for which can be readily appreciated in terms of a lower return profile.  To the best of our knowledge this is the first time the Reserve feature has been brought to the adviser market and whilst obviously not eliminating risk to capital, does provide additional support during distressed markets.”