| Good Afternoon
It’s not often we split a product suite from a provider into separate emails, but the new launch from Tempo, unveiled today, deserves special attention. Email 1 of 3 … Question: How do you improve the likelihood of investing in a range of kick-out options, with the deepest barrier levels of any products in the market, and exceptional potential returns? Answer: Consider investing in a combination of the three compelling options available in the Tempo Long Kick-Out Plan!! Please read on for full details of this exceptional plan …
They have clearly been thinking carefully about how to develop their product suite in the current market environment, particularly in respect of the Covid-19 situation and outlook, but also noting important market dynamics (low rates/low growth expectations) which were evident prior to the current crisis. And incredibly, their response to the market environment has been to move the end of term barriers for all of their products in Issue 13 from their usual 60% level, which allowed a 40% fall, to an exceptional 30% level, allowing a 70% fall in the index over the next decade: the deepest level they have ever arranged (or that we have ever seen!). In addition, they have introduced new plans and options, with exceptionally deep conditions for generating positive returns, including their renamed Long Growth & Kick-Out Plan and their relaunched Long Income Plan. We will send through three separate emails, to cover their full product suite. > This first email provides details of their popular Long Kick-Out Plan Separately, we will forward details for: > The renamed Long Growth & Kick-Out Plan > The relaunch of the ground-breaking Long Income Plan You can find a summary of the plan and links to the full details below, including details of comparable products and our analysis of the potential returns … Of course, and as always, please see the full plan literature for full details of these plans and the features, terms and conditions, including the risks. PLEASE NOTE: the offer period for the Long Kick-Out Plan runs until Friday 12 June (unless it closes early). It may well close early in the current market environment. Please contact us swiftly if investing is of interest.
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:
Issue 13 includes TWO defensive step down options: > LKO1 steps down to an exceptional 30% at year 10, allowing an incredible 70% fall, while still generating positive returns of more than 5% per year > LKO2 steps down to 65% at year 10, allowing a 35% fall, while still generating double digit positive returns > While LKO3 offers stellar returns if the index is at or above start level
The following section provides brief details of other currently available products and our analysis of the potential returns on offer currently (as at 12.05.20): ‘DEFENSIVE’ KICK-OUT PRODUCTS There are currently 8 defensive and step down kick-out products available in the market, including Tempo’s LKO1 and LKO2. > Tempo’s LKO1 offers 5.75% pa, with a kick-out condition which reduces by 10% p.a. to a final step-down condition of 30%. > Tempo’s LKO2 offers 11.25% pa, with a kick-out condition which reduces by 5% p.a. to a final step-down condition of 65%. > Re comparable* step-down products to LKO1, only 5 other products step down as far as 80% at the final year: and the average potential returns of these is just 8.00% p.a. (compared to LKO2 at 11.25% p,a. with its deeper step down). ‘AT OR ABOVE START LEVEL’ KICK-OUT PRODUCTS There are currently 14 kick-out products which require the 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 17.75% pa, with an at or above start level condition throughout the investment term. > Re comparable* ‘at or above’ products, the average return of the 12 other products is just 9.81%. However, notably, all of those products have higher (i.e. worse) end of term barriers. Only three providers with plans at or above start level have a 60% end of term barrier. *Comparisons to other products is based on analysis of all products in the market as at 12.05.20, 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. However, it should be noted that 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.
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 17.75% pa, if stock market movement and other factors mean that we can increase this further during the offer period, the actual terms may be increased to, say, 19.00% pa, which would be confirmed following the start date. Last time around, 13.1% pa was the coupon stated in the brochure, for LKO3, but it became 20.4% pa during the offer period! What’s not to love about this great feature, which only Tempo offers!
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. 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. Particularly following recent stock market falls, it is important to carefully consider the current level of the FTSE 100 FDEW and the level of its fixed dividend. 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 similar products linked to the FTSE 100. Importantly, Tempo have identified the target market for investors in issue 13 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.
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: deliberately defensive structured products. We think this approach has real merits and can add real value for investors in balanced and diversified portfolios, in the current market environment.
https://www.bestpricefs.co.uk/tempo-structured-products/#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. Please ensure that you view the plan documents for full details of the features and the risks.
The promotion of the plans do 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 access the literature for these products: Click here to go to the products on our website:
Issue 9 and 10 both had to close early, due to demand. So, we’d certainly suggest early contact if you are interested to invest in Issue 13, 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 |
