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Our investment products can provide both individual and institutional investors with flexible investment vehicles, which can accommodate varying appetites for risk, asset exposure and capital protection.

It is important that you understand the risks attached to each of the investments. The key risk areas are summarised below, but please remember that these are general risks and those relevant to a particular product are set out in the product literature.

Meteor does not provide financial advice or guidance on tax issues and we recommend that you talk to a financial adviser if you are considering investing. Some products require you to seek professional financial advice. Such products will be highlighted on the website and in the brochure.

Any investment should only form part of your total investment portfolio. You should also maintain savings you can access immediately and without penalty to meet any emergency cash needs that may arise during the investment term.

Availability and Residence – due to local regulatory and legal requirements, not all products described on this website are available in all jurisdictions and some may be available on a limited basis only.

The securities mentioned on this website are not being offered, and will not be sold, within the United States or to, or for the account or benefit of, any U.S. person. The term U.S. person shall have the meaning as defined in Regulation S under the United States Securities Act of 1933 and includes, among other things, U.S. residents and U.S. corporations and partnerships.

Cancellation Risk – the risk that if you decide to cancel the investment after assets have been purchased you could lose some of your money if the market(s) or asset(s) to which your contract is linked have fallen since the purchase date.

Counterparty Risk   – the risk that a financial institution with whom we arrange the assets to provide investment returns does not, or cannot, pay the amounts due, which could cause you to lose some or all of your money and any investment returns that would have otherwise been payable.

Early Encashment Risk – the risk that if you decide to encash the investment before maturity you could get less back than you invested. Administration charges for early encashment will increase any losses.

Inflation Risk – the risk that inflation will reduce the real value of your investment over time.

Investment Risk – The risk that the market(s) or asset(s) to which your investment is linked fall in value, which could cause you to lose money.

ISA Transfer Risk – if you wish to transfer an existing ISA this must be done in cash, which means your existing ISA manager will sell your investments and you may be charged an exit or transfer fee. There is the potential for loss of income or growth if markets should rise while your transfer remains pending.

Liquidity Risk – the risk that you may not be able to immediately access the value of your investment.

Pricing Risk – the risk that a financial institution with whom underlying investments have been arranged may not be able to quote regular prices making it difficult to value your investment and delaying any early encashment request you may make.

Product Risk – the risk that the product design could produce a return that is lower than a direct investment in the market(s) or asset(s) to which the product is linked.

Tax Risk – The values of any tax reliefs will depend on your individual circumstances. You should note that the levels and bases of taxation could change in the future and these changes may be applied retrospectively.

It is important that you read any product literature carefully and in full so that you understand how the product works and can decide whether or not you are prepared to accept the risks and the possible consequences of investing in a particular contract, before proceeding with an investment.

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Research & Analysis

How Structured Products have fared so far in 2020

Future Value Consultants (FVC) recently published an article on the performance of capital protection barriers since the start of the year

Future Value Consultants (FVC) recently published an article on the performance of capital protection barriers since the start of the year. The analysis looks at stock market falls and volatility in early 2020 and examines how UK structured products have fared as a result.

In the article, Tim Mortimer, Managing Director of FVC,  highlights the extreme volatility experienced by the FTSE 100 during the Coronavirus pandemic, “FTSE-100 volatility for the first three months of 2020 was 44%, compared to an average since 1984 of less than 16%.”

With most structured products on the market considered capital-at-risk, the capital protection barriers are starting to be tested. Many retail SPs today have a barrier of around 60-70% and those that started at the peak of the FTSE-100 will be operating close to, or below their respective barriers right now. Thankfully, they are likely years away from actually needing to compare the capital protection barrier and have time to recover.

“Subsequent developments in February and March 2020 produced some very large falls and overall the index lost nearly 24% from the end of 2019 to the time of writing (8 April 2020), standing at a level of 5840. Slightly earlier, on 23 March 2020 it had its lowest close of the year to date, finishing at 4993, down 34% on the year”

A silver lining to the drop in index levels is that plans striking now and in the near future will benefit from the lower entry and investors in those plans will expect higher chances of payoff once markets begin to recover.

Finally, Mortimer says “We can therefore conclude that If markets move sideways or better, not a single FTSE-100 linked UK structured product that is in-force today will lose money. No product is immediately at risk of further short term moves since the first barrier is not active until next year, and no barrier until 2022 is above 4173, a level far below where the FTSE-100 is today.” thus highlighting the key factor of including capital protection barriers into a structured product to weather storms such as the pandemic we are all currently experiencing.

Click here to read the article in full

Posted: 22 April 2020
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