Morgan Stanley offers second tranche of structured deposits

Morgan Stanley has unveiled the Morgan Stanley Protected Growth Deposit Plan 2 and the Morgan Stanley Simple Growth Deposit Plan 2.

The plans may appeal to investors who wish to access capital-protected investment strategies eligible for cover from the FSCS. Structured deposits are also accessible through offshore bonds.

Marc Chamberlain, executive director at Morgan Stanley, said:

“Our first launch into the structured deposits market was a success and the currently favourable pricing conditions allow us to offer repeat terms that our adviser client base will appreciate. Feedback continues to indicate that simplicity and consistency of product design are important and the main reasons why we’re re-issuing these plans with the same terms.”

Its Morgan Stanley Protected Growth Deposit Plan 2 allows investors to benefit from exposure to UK stock market growth and 100% capital protection at maturity. The deposit is held with Lloyds TSB Bank plc and will be covered by the FSCS up to a pre-set amount (currently £85,000).

This plan offers two routes to returns:

1. A fixed return

If the FTSE 100 index has risen by 40% after four years, then the early exit feature kicks in and investors receive a fixed return of 40% on their initial investment plus the repayment of their initial deposit in full.

2. A variable return

If the early exit feature is not triggered, then the plan continues to maturity (six years) and investors will receive 130% of any growth in the FTSE 100 index plus the repayment of their initial deposit in full. If the index level at maturity is below the initial level then there is no growth and hence no growth payment, however investors will still receive their initial deposit in full.

Meanwhile, the Morgan Stanley Simple Growth Deposit Plan 2 provides full, uncapped exposure to the UK stock market over a six year term.

Investors receive 120% of any positive performance in the FTSE 100 index, with no upper limit. The plan is also designed to repay 100% of the initial investment at maturity, even if the FTSE 100 index is unchanged or falls over the investment term. Similar to the Protected Growth Deposit Plan, the deposit is held with Lloyds and will be covered by the FSCS up to a pre-set amount (currently £85,000).

Morgan Stanley will remain the plan manager for both plans and the deposits will be held with Lloyds TSB Bank plc, rated A+ by Standard & Poor’s and covered by the FSCS.

The plans are available for direct investment, SIPP / SSAS investors, cash ISAs, transfers of existing ISAs and discretionary investment as well as investments from charities, companies and trustees. The deadline for submitting ISA applications is 5 May 2011 and 28 April 2011 for ISA transfers.

Both plans have six year terms to full maturity. The minimum investment for each plan is £3,000 and they are likely to be subject to income tax.