Tempo's 'stated terms or better' pledge delivers best-ever terms for structured products investors
Tempo Structured Products (Tempo), part of the Alpha Real Capital group, has confirmed that investors in two of the product options included in their most recent product suite will automatically benefit from significantly improved product terms, made possible because of recent stock market volatility, as a result of Tempo’s unique ‘Stated terms or better’ pledge.
The potential return of the Tempo Long Kick-Out Plan (Option 3): increased from 13.1 per cent pa, to 20.4 per cent pa (an additional 7.3 per cent pa)
The potential return of the Tempo Long Growth Accelerator Plan (Option 2): increased from 107.5 per cent to 175 per cent at year five (an additional 67.5 per cent) and from a maximum of 180 per cent to 300 per cent at year 10 (an additional 120 per cent)
Tempo includes a unique feature in its plans: the 'Tempo pledge: Stated terms or better'. The pledge, which is an industry first, allows Tempo to improve the terms of their plans above the terms stated in brochures, if the stock market and other factors during an offer period make it possible to do so.
Chris Taylor, Global Head at Tempo, says: “Our stated terms or better pledge is designed to give us the opportunity to pass on the benefit of stock market movement and other factors which could result in improved terms for investors during an offer period to investors in our plans.
"We introduced the pledge at the end of 2019, as part of our aim to 'do the right things - and do simple well', redefining structured products for professional advisers and their clients. If the pledge results in improved terms, during an offer period, these are confirmed to investors at the start of their investment. The terms of our plans will always be at least those stated in our plan brochures – the pledge can only ever increase and improve the terms of a plan above the stated terms.
"Clearly stock market movement has been significant in the recent period, and so we are pleased to take this opportunity to provide details of the pledge in action, highlighting how it can benefit investors with two examples of plan options in our recent product suite, which started last week.”
Details of the two product options which have benefitted from improved terms as a result of the pledge are:
1. The Tempo Long Kick-Out Plan (Option 3)
This plan offers a potential fixed return, which accumulates for each year that the plan runs and is paid if the FTSE 100 FDEW (an equal weight and fixed dividend version of the FTSE 100, provided by FTSE Russell) closes at or above 100 per cent of the start level on one of the kick-out anniversary dates or the end date. The potential fixed return was increased as a result of the pledge from 13.1 per cent pa stated in the brochure, to 20.4 per cent p.a. (an additional 7.3 per cent pa).
2. The Tempo Long Growth Accelerator Plan April 2020 (Option 2)
This plan offers a potential fixed return after five years, paid if the FTSE 100 FDEW closes at or above 110 per cent of the start level. Otherwise, it pays a return equal to a multiple of the amount by which the FTSE 100 FDEW closes above 90 per cent of the start level on the end date, after 10 years, up to a maximum return. The potential return after five years has been increased from 107.5 per cent to 175 per cent (an additional 67.5 per cent). And the potential return after 10 years has also increased, from 6 times the amount that the FTSE 100 FDEW has closed above 90 per cent of the start level, with a maximum return of 180 per cent stated in the brochure, to 10 times the amount, with a maximum return of 300 per cent (an additional 120 per cent).
Taylor adds: "These terms are clearly exceptional, highlighting the USPs of structured products generally, but also specifically demonstrating the tangible value of the unique Tempo pledge. Investors in these plans invested happily based on the terms stated in the brochures, which were already good, but they are now finding out that the final terms have been improved and are even better: in fact, the best that Tempo has offered for these plan options."
Managing director of Best Price Financial Services, Richard Harry, an advisory firm which includes structured products in its recommendations to its clients, says: "Structured products offer investment propositions which can add real value for many investors in properly diversified portfolios, especially during times such as the current COVID-19 environment. We loved the innovative Tempo pledge as soon as we saw Tempo introduce it at the end of last year, so it’s been good to see it in action now, delivering a really significant benefit for our clients in the plans. It’s a fantastic pledge and approach from Tempo, improving outcomes for investors."
The structured products sector in the UK has been experiencing steadily increasing support amongst professional advisers, including wealth managers and IFAs, in recent years, with an increasing number of advisers recognising the advances made by the industry over the last decade and the potential benefits of investment contracts backed by major investment bank counterparties, which can combine protection from stock market falls with the ability to generate positive returns in flat or even falling market conditions.
Chairman of the UK Structured Products Association (UKSPA), Zak de Mariveles, which represents issuing investment banks and plan managers in the UK, adds: "Structured products can offer investors significant benefits alongside many other types of investment, such as active and passive funds, especially in times of market uncertainty such as we find ourselves in now. The impressive year-on-year performance of maturing products over the last decade, also noting that such products typically combine defined levels of protection from market risk with positive returns even if markets are flat, or falling, continues to attract increasing numbers of advisers and investors. The UK structured product sector aims to put investor’s best interests at the heart of what we do, and welcomes all product innovations that clearly demonstrate this mantra in action."