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Volatility enables UK income, says Morgan Stanley

Friday January 07, 2011 at 12:00

FTSE Income Plan 4 is a six-year structure with capital protected at maturity as long as the underlying index has not fallen by more than 50% over the term and failed to recover by maturity, in which case capital will be reduced in line with the underlying performance.

Morgan Stanley said it was able to price this plan when volatility spiked back in December and locked in the return for a January launch.

The pricing environment moved away from us at the end of last year making it difficult to structure something that offered attractive return potential, said Sophie Barnett, vice president at Morgan Stanley.

However, a short-lived uptick in volatility observed at the start of December 2010 created an attractive pricing environment - we took the opportunity to lock in a market leading rate for an income product and still offer some protection from market falls.

The counterparty for the plan is Morgan Stanley & Co International plc, rated A+ by Standard & Poor's.

Morgan Stanley FTSE Income Plan 4 will be open for subscription until 3 February. Minimum investment is £3,000.

This product is available in Recent Additions (UK).


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