Anyone know anything about Barclays Defined Returns Plan(AK100)?

[MarillionFan]

Does anyone know or looked at the plan in the title.

Nice little investment plan from Barclays. Returns 7.75% per year on an investment, if the Ftse is higher than it was when you invested.

Now, if on the anniversary each year it's higher it will kick you out immediately given you 107.75% of your investment. If in 12 months, the FTSE is lower, it locks in for another year and would return 115.5% the following.

Now, this uses your CGT, so effectively could be tax free if you havent used it up to your allowance of 10k

Basically it can run to 5 years accumulating 7.75% per year (in theory). You'd basically have to have a pretty crappy 5 year run not to get a return.

If at the end the FTSE is lower, then you lose that % of your capital.

Right, apart from the risk element on 5 years, whats wrong with it? Bugger all on any website elsewhere!

[northernladuk]

10 year graph of Footsie

This will probably need a trained eye to look over. After reading this post a couple of times the first thing that comes to mind is it looks too good true which probably means... etc etc

Could it be they are gambling on big growth, say 15% next year of which they will pocket 7.5% of your investment?

You dont mention what happens to your cash if the market is down. Will they cap your returns to 7.5% but will pass any losses straight on to you i.e. if the market goes up 20% u only get 7.5 so they are in pocket. If it goes down by 10% you loose 10% so they don't loose anything? If you do have a bad run and you loose 5 years running your 7.5% accumulated may not cover the losses passed on over the previous 5 years?

That said it doesn't look like a bad deal. Not particulatly high returns, 7.5% isn't great bearing in mind it is pretty safe to say it is going to be north for a bit yet, but still better than sitting in your bank and the risk seems pretty low.

Are you willing to suffer risk by dipping your toes back in to the stock markets and if you are do you only want 7.5% back I guess.

Hope I havn't made a complete dick of myself here....

[Fred Bloggs]

OK, from that post, I'm guessing that the upside is limited to just less than 7.5% growth per annum because at 7.5% you get kicked out. Yes? But if the market is 20% lower after 5 years, you lose 20% of your capital? Sounds like a pretty cra*ola deal to me, that. Don't forget that the footsie was ~7000 at the end of 1999. Today, it's ~5000. It isn't always going up.

[GreenerGrass]

Yes? But if the market is 20% lower after 5 years, you lose 20% of your capital? Sounds like a pretty cra*ola deal to me, that. Don't forget that the footsie was ~7000 at the end of 1999. Today, it's ~5000. It isn't always going up.

AND you won't get any dividend income accumulation. Don't forget a lot of stockmarket investment total return is down to dividends, not just the level of the FTSE.

[MarillionFan]

OK, from that post, I'm guessing that the upside is limited to just less than 7.5% growth per annum because at 7.5% you get kicked out. Yes? But if the market is 20% lower after 5 years, you lose 20% of your capital? Sounds like a pretty cra*ola deal to me, that. Don't forget that the footsie was ~7000 at the end of 1999. Today, it's ~5000. It isn't always going up.

Yes, that's the premise, but a little more subtle.

You invest £100K today when the ftse is 5000.If on the same date in 12 months and the ftse >5000 (ie 5010 or 6000 either way dont matter), then the Kickout will push you out and return £107.5K. This will be part of your capital gains allowance. If the ftse is <5000 then it rolls on to year two

Another 12 months later on the same date, if the ftse >5000 (again 5010 or 6000 etc doesnt matter) you get 2x7.5*x£100K, so it kicks you out returning £115K as part of your capital gains(maybe a little tax here). If <5000, then it rolls to year 3.

Year 3 £122.5K
Year 4 £130K
Year 5 £137.5K

Now on Year 5, if the ftse <5000 and has been at every point in the last 5 years, you get your capital back minus the difference on the ftse. So if it was 4000 then you'd have lost £20k, plus had no interest on the moneys.

Anyway, it's a pretty subtle investment plan. It all depends on how confident you are on the movement of the FTSE and the stability of Barclays(remember they bought Lehmans!)

Now you could do this yourself through the stock market, but of course that could also go down.

I quite like it as an investment vehichle. I personally believe that an entry point of 5000 on the market is quite good. It was 3500 in March when I invested in shares and I returned £20k since then, I believe that the market will be >5000 by this time next year, or at least the next. Either way you have 5 bites of the cherry, the No Years x 7.5% is guaranteed to kickout. Obviously if the cherry turns out to be sour you lose!

[Fred Bloggs]

AND you won't get any dividend income accumulation. Don't forget a lot of stockmarket investment total return is down to dividends, not just the level of the FTSE.

Correct.

[Fred Bloggs]

Yes, that's the premise, but a little more subtle.

You invest £100K today when the ftse is 5000.If on the same date in 12 months and the ftse >5000 (ie 5010 or 6000 either way dont matter), then the Kickout will push you out and return £107.5K. This will be part of your capital gains allowance. If the ftse is <5000 then it rolls on to year two

Another 12 months later on the same date, if the ftse >5000 (again 5010 or 6000 etc doesnt matter) you get 2x7.5*x£100K, so it kicks you out returning £115K as part of your capital gains(maybe a little tax here). If <5000, then it rolls to year 3.

Year 3 £122.5K
Year 4 £130K
Year 5 £137.5K

Now on Year 5, if the ftse <5000 and has been at every point in the last 5 years, you get your capital back minus the difference on the ftse. So if it was 4000 then you'd have lost £20k, plus had no interest on the moneys.

Anyway, it's a pretty subtle investment plan. It all depends on how confident you are on the movement of the FTSE and the stability of Barclays(remember they bought Lehmans!)

Now you could do this yourself through the stock market, but of course that could also go down.

I quite like it as an investment vehichle. I personally believe that an entry point of 5000 on the market is quite good. It was 3500 in March when I invested in shares and I returned £20k since then, I believe that the market will be >5000 by this time next year, or at least the next. Either way you have 5 bites of the cherry, the No Years x 7.5% is guaranteed to kickout. Obviously if the cherry turns out to be sour you lose!

I see your point. Myself, I'd rather put the £100k into a savings account (paying, I guess ~3%?) and dribble say £1500 a month out of that and into a basket of superstar manager unit trusts. Given the averaging of buying prices over the five years plus probably a consistent 3% or 4% dividends, I reckon you'd come out ahead of the game. No guarantees there, but then again there isn't with the structured product either.