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Blue Sky launches five-year income plan with auto-call feature

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Blue Sky Asset Management has launched a five-year income plan offering a 3.5 per cent income potential every six months, with an auto-call early closure feature that can return capital to investors after just 12 months.

The launch follows the early maturity of the first open offer issue of the Plan Series, which auto-called in January after just six months, making an income payment of 4.5 per cent and returning capital in full to investors.

The new plan offers 3.5 per cent semi-annual income potential, with the first six-monthly income payment now fixed and unconditional.

From month 12, ongoing income payments are linked to the index corridor condition, with 3.5 per cent income payable every six months (seven per cent-plus pa) if the FTSE 100 is at or above 90 per cent of its starting level and below 105 per cent of its starting level.

At the first six month point that the FTSE 100 is at or above 105 per cent of its starting level the Plan makes a final income payment of 3.5 per cent and auto-calls repaying capital in full.

Should the plan not close early at any auto-call point during the investment term, protection from stock market risk is provided at maturity unless the FTSE-100 falls by more than 50 per cent during the investment term and remains below its starting level at maturity in 2015.

The counterparty for the plan is BNP Paribas.

Chris Taylor (pictured), chief executive at Blue Sky, says: “The investment rationale of the High Income Corridor Auto-Call Plan is premised on the pragmatic acceptance that it is currently difficult, if not impossible, to call the economic backdrop and outlook, particularly with regard to interest rates, with any degree of certainty – as Mervyn King himself acknowledges. On one hand, we have some economists who are mindful of the risk of a ‘double dip’, suggesting rates may stay below one per cent for up to five years, which the lower than expected 0.1 per cent Q4 2009 GDP number highlighted. On the other hand, we have economists identifying ‘green shoots of recovery’, and the latest inflation figures reaching 2.9 per cent, suggesting that higher rates will be needed at some point.”

The plan is available as an Isa, for Isa transfers, through pension schemes including Sipp and Ssas, and for corporate, trustee and charity investment. Minimum investment is GBP10,000 for direct investment or GBP7,200 for Isas and Isa transfers.

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