ood Afternoon
It’s not often that we split a product suite launch from a provider into separate emails, but the new launch from Tempo, unveiled today, deserves special attention.
Email 3 of 3 …
Question: How do you improve on the rates available on savings products, the yields available via fixed income / bonds, and / or the income available via equity income funds?
Answer: Consider investing in the ground-breaking Tempo Long Income Plan!!
Please read on for full details of this exceptional plan …
- ISSUE 13 OF TEMPO’S PRODUCT SUITE IS NOW LIVE
- AND THEY’VE DONE IT AGAIN! YET MORE GROUND-BREAKING PRODUCT DEVELOPMENTS FROM TEMPO, IN RESPONSE TO THE CURRENT COVID-19 ENVIRONMENT
- CHECK OUT THE END OF TERM BARRIER LEVELS AND CONDITIONS FOR POSITIVE RETURNS TO BE GENERATED ON THEIR PLANS: THESE ARE THE DEEPEST WE HAVE EVER SEEN!
Further to our initial emails, this email provides details for Tempo’s relaunched Long Income Plan
The separate emails provide details for:
> The popular Tempo Long Kick-Out Plan
> The exceptional renamed Tempo Long Growth & Kick-Out 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 Income Plan runs until Friday 19 June (unless it closes early). It may well close early in this current market environment.
Please contact us swiftly if investing is of interest.
THE TEMPO LONG INCOME PLAN
Tempo’s Long Income Plan provides two investment options, each offering the potential for fixed income payments each quarter, with an innovative memory feature, and opportunities for automatic early maturity from the 3rd anniversary.
The potential annual returns of each option are:
As with all of the plans in Issue 13 from Tempo, the Long Income Plan benefits from a 30% end of term barrier, allowing the index to fall by 70% over a decade.
The plan’s unique ‘memory feature’ is really compelling.
If a quarterly income payment is missed due to the level of the FTSE 100 FDEW on a quarterly income date, the plan remembers, and the missed payment can potentially be generated on a future quarterly income date.
On the next quarterly income date at which the FTSE 100 FDEW closes at or above the level needed for the option(s) chosen, any missed income payments will be generated, together with the income payment due for that quarter!
What a great feature! If you think that the index level can be expected to be at or above 30% for option 1, or 75% for option 2, in a decade, then the plan can be expected to pay each and every coupon for the decade!
In a ‘lower for longer’ rates environment, for cash and fixed income, and with equity income funds facing significant headwinds, we believe that both of the Tempo Long Income Plan options, with their deep barrier levels and unique memory feature, present really attractive propositions for investors seeking income.
AN OVERVIEW OF AVAILABLE AND COMPARABLE* PRODUCTS
The following section provides brief details of comparable products and our analysis of the potential returns on offer currently (as at 12.05.20):
INCOME PRODUCTS
In fact, there are currently hardly any income products available! There are only 5 Income products available in the market, including Tempo’s LIP1 and LIP2!
> Tempo’s LIP1 offers 4.25% p.a., which allows for an index* fall of 70%, with the memory feature
> Tempo’s LIP2 offers 7.15% p.a., which allows for an index* fall of 25%, with the memory feature
> Re comparable products, two offer 6% p.a., one of which allows for an index* fall of 17.5% and the other of which allows a fall of 20%. The third other product offers 4.6% p.a. and allows for an index* fall of 40%. The end of term barriers for the other products are materially higher (at 60% or 65%) than the Tempo plan (at 30%).
*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
THE UNIQUE TEMPO PLEDGE: ‘STATED TERMS OR BETTER’
As we recently highlighted, Tempo’s plans all come with the fabulous Tempo pledge: ‘Stated terms or better‘.
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.
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.
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.
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!
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: 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.
DON’T FORGET THE RISKS
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.
ONLY AVAILABLE WITH ADVICE …
Tempo’s products can only be accessed with advice.
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 FIND OUT MORE
To access the literature for these products click here:
https://www.bestpricefs.co.uk/tempo-structured-products/
Demand for the Tempo products is expected to be high.
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 the products.
Best Regards.
Best Price FS Team