Good Afternoon
Following on from my earlier emails I am appending below a reminder of the second email we sent recently in connection with the current tranche of Tempo products which are now in their final couple of weeks of issue …
Email 2 of 4 …
The Tempo Long Kick-Out Plan (3 options)
Question: How do you improve the likelihood of investing in a kick-out product with the deepest barrier levels of any similar products in the market and exceptional potential returns?
Answer: Consider investing in one (or more!) of the three compelling options available in the Tempo Long Kick-Out Plan!!
Please read on for full details of this exceptional plan … including the new ‘step down’, Option 2, which provides the potential for a double digit return, even if the index falls by 17.5% over the investment term, with Tempo’s deep end of term barrier level!
Tempo has now launched Issue 16 of its product suite.
Tempo’s response to the current market environment has been to move the end of term barriers for products from their usual 60% level (which allowed a 40% fall) to an exceptional 40% level (allowing a 60% fall) over the next decade: the deepest level for any capital at risk products currently available!
In addition, Tempo’s plans include options with exceptionally deep conditions for generating positive returns.
You can find a summary of the Long Kick-Out Plan and links to the full details below, including details of comparable products and our analysis of the potential returns …
As always, please see the full plan literature for full details of the plan and the features, terms and conditions, including the risks.
PLEASE NOTE: the offer period for the Long Kick-Out Plan runs until Friday 13 November (unless it closes early).
Demand for Tempo’s plans has been high recently, so please contact us swiftly if investing is of interest.
THE TEMPO LONG KICK-OUT PLAN
Tempo’s Long Kick-Out Plan (counterparty Société Générale) optimises the popular kick-out strategy, through the simple step of combining a longer maximum term, with short term kick-out potential, and defensive index conditions.
The potential annual returns of each option are:
> LKO1 allows the FTSE 100 FDEW to fall by 5% p.a., from the 3rd anniversary, up to 35% on the 10th anniversary / end date
> LKO2 allows the FTSE 100 FDEW to fall by 2.5% p.a., from the 3rd anniversary, up to 17.5% on the 10th anniversary / end date
> LKO3 simply needs the FTSE 100 FDEW to be at or above 100% of the start level, on any of the kick-out anniversaries or on the end date … providing an exceptional potential return, without needing the FTSE 100 to rise
CASPA: CURRENTLY AVAILABLE STRUCTURED PRODUCTS ANALYSIS
The following section provides brief details of other currently available products and our analysis of the potential returns on offer currently (as at 28.09.20):
‘DEFENSIVE AND STEP DOWN’ KICK-OUT PRODUCTS
There are currently 9 defensive and step down kick-out products available in the market, including Tempo’s LKO1 and LKO2.
> Tempo’s LKO1 offers 7.25% p.a., with a kick-out condition which reduces by 5% p.a. to a final step-down condition of 65%.
> Tempo’s LKO2 offers 10.25% p.a., with a kick-out condition which reduces by 2.5% p.a. to a final step-down condition of 82.5%.
> Re comparable* step-down products, the average potential return of the other 7 defensive products is just 5.82% p.a. (compared to LKO1 at 7.25% p.a. and LKO2 at 10.25%). No other defensive kick-out products step down as deeply as either Tempo’s LKO1 (to 40%) or Tempo’s LKO2 (to 65%) or have such deep end of term barrier levels as Tempo’s LKO (at 40%).
Notably, the potential kick-out return of Tempo’s LKO1 (which allows the FTSE 100 FDEW to fall to 65% of the start level) matches or betters the potential kick-out return of other provider’s dual index defensive kick-out products, which also have less deep step down levels and higher end of term barrier levels, while the potential kick-out return of Tempo’s LKO2 (which allows the FTSE 100 FDEW to fall to 82.5% of the start level) betters the potential kick-out return of all other provider’s FTSE 100 linked kick-out products, including defensive, ‘atm’ and dual index ‘atm’ products.
‘AT OR ABOVE START LEVEL’ (‘ATM’) KICK-OUT PRODUCTS
There are currently 11 kick-out products which require a single index to be at or above the start level (or which have a higher condition, which requires the index to have risen) including Tempo’s LKO3.
> Tempo’s LKO3 offers 13.5% p.a., with an at or above start level condition throughout the investment term.
> Re comparable* ‘at or above the start level’ products, the average return of the 10 other products is just 8.13% p.a. However, notably, all of those products have higher end of term barriers and one also has a higher level for kick-out. The average return of the other atm kick-out products, excluding the higher kick-out level product, is 8.03% p.a.. No other atm kick-out products have such deep end of term barrier levels as Tempo’s LKO (at 40%).
Notably, the potential kick-out return of Tempo’s atm LKO3 betters the potential kick-out return of all other provider’s index linked atm kick-out products of any type, including dual index atm products*.
*Comparisons to other products is based on analysis of all products in the market as at 28.09.20, using FVC research reports, comparing potential returns and product features. It should be noted that the Tempo plans use an equal weight, fixed dividend version of the FTSE 100, known as the FTSE 100 FDEW. This was developed by FTSE Russell specifically with the aim of helping investment banks produce better terms on structured products. The FTSE 100 FDEW will perform differently to the FTSE 100, due to the equal weighting and the fixed dividend approach. This means that the returns from plans linked to it might be higher or lower than the returns from a similar product linked to the FTSE 100. Please also see the section below with further important information regarding the FTSE 100 FDEW.
THE UNIQUE TEMPO ‘STATED TERMS OR BETTER’ PLEDGE …
Tempo’s plans all come with their fabulous ‘Stated terms or better‘ pledge.
This unique feature allows Tempo to increase the terms of a plan above those stated in brochures, if the stock market and other factors during an offer period mean that they can do so.
For example, while the Long Kick-Out Plan brochure details option 3 as offering 13.5% pa, if stock market movement and other factors mean that Tempo can increase this further during the offer period, the actual terms may be increased to, say, 14.0% pa, which would be confirmed following the start date.
In Issue 12, LKO3 was ‘supposed’ to offer 13.1% p.a., as stated in the brochure, but this was increased to 20.4% p.a. during the offer period, as a result of the pledge!
What’s not to love about this great feature, which only Tempo offers!
IMPORTANT POINTS REGARDING THE FTSE 100 FDEW | TARGET MARKET
As we’ve explained previously, Tempo have drawn on strong team knowledge of indexation and a research-based approach to index selection, with their plans using an equal weight, fixed dividend version of the FTSE 100, known as the FTSE 100 FDEW.
The FTSE 100 FDEW was developed by FTSE Russell specifically with the aim of helping investment banks offer improved terms (in other words, higher potential returns or lower risks) on structured products. Société Générale have an exclusive license with FTSE Russell to use the FTSE 100 FDEW. And Tempo have agreed exclusivity to use the index in their plans with Société Générale.
However, it should be noted that the FTSE 100 FDEW will perform differently to the FTSE 100, due to the equal weighting and fixed dividend approach. This means that the returns from plans linked to it might be higher or lower than the returns from a similar product linked to the FTSE 100.
Neither equally weighted nor market capitalisation weighted indexes are better or worse than the other. Each offers a different approach and has different merits: risks and returns will be different for each and will depend on the future stock market environment and the performance of the companies in each index.
While the fixed dividend approach can help provide higher potential returns or lower risks for structured products, it can affect the level of the FTSE 100 FDEW negatively, when the fixed dividend is higher than the level of dividends being paid by companies in the index.
It is important to carefully consider the current level of the FTSE 100 FDEW, the level of its fixed dividend and the outlook for its future level.
Importantly, Tempo have identified the target market for investors in Issue 16 as investors who have a positive view of the future level of the FTSE 100 FDEW, over the medium to long term.
Information about the FTSE 100 FDEW can be found in the plan brochures.
ALL OF TEMPO’S PRODUCTS ARE ‘DELIBERATELY DEFENSIVE’
Tempo’s products are described as ‘deliberately defensive’, meaning that they are all designed so that they can generate some or all of their returns without requiring the market index which they are linked to, to rise, with a defined level of protection should the market index fall.
Tempo’s products benefit from the firm’s operational strength and rigorous approach to governance, are backed by strong issuers / counterparties, and are based on a single index, with a deep end-of-term barrier.
These are the Tempo hallmarks.
We think this approach has real merits and can add real value for investors in balanced and diversified portfolios, in the current market environment.
DON’T FORGET THE RISKS
As with all forms of investment there are risks involved. These plans do not guarantee to repay the money invested. The potential returns of the plans and repaying the money invested are linked to the level of the stock market and also depend on the financial stability of the Issuer and Counterparty Bank.
Past performance is not a guide to future performance and may not be repeated. Investment involves risk. The performance data does not take account of the commissions and costs incurred on the issue and redemption of shares. The value of investments and the income from them may go down as well as up and investors may not get back any of the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money. Exchange rate changes may cause the value of overseas investments to rise or fall.
As always, the recommendation and common sense approach is to consider product solutions as a portfolio, never over-exposing oneself to a point of financial pain and suffering liquidity or counterparty over exposure.
Please ensure that you view the plan documents for full details of the features and the risks.
ONLY AVAILABLE WITH ADVICE …
Tempo’s products can only be accessed with advice.
The promotion of the plans does not constitute ‘advice’ to invest. Advice is always specific to an individual investor’s circumstances and needs, following the process of ‘know your customer’, with the aim of ensuring that any product is suitable for an investor.
TO FIND OUT MORE
To access the literature for these products:
Click here – https://bestpricefs.co.uk/tempo-structured-products/
Demand for the Tempo products is expected to be high.
So, we’d certainly suggest early contact if you are interested to invest in Issue 16, in order to try to ensure availability and access.
Please contact us to discuss any aspect of these products.
Best Regards
Best Price FS Team