MMPI’s latest investment products deserve mention because of their innovative variables. MMPI is conscious that most investors require capital security first and foremost. But we are also aware that most investors understand capital security comes at a price. The standard benchmark against which capital security is measured is prime-rated government bonds, say, Germany, currently paying negative returns. In other word the investor pays the German government for the privilege of daring to buy one of its bonds. Obviously, this is not a meaningful option for hard-pressed retail investors. A lower benchmark is a prime-rated bank and while your money might be reasonably safe the return is currently 0%.
The MMPI Escalator series of investments takes a different approach. MMPI chooses a prime-rated bank to hold the funds (BNP Paribas) and then ingeniously adopts a strategy that puts some of the funds at risk in order to create the potential for a higher return. This type of trade-off is now mandatory for those investors looking for returns to match or beat inflation.
Here’s how the capital protection works for MMPI’s latest investment products. If BNP Paribas defaults or becomes insolvent (i.e. goes bankrupt or similar) investors could lose some or all or their money. BNP is one of the strongest backs in Europe and is far stronger than its Irish and UK peers. Aside from that unlikely event, investor capital is additionally secured in a number of clever ways.
Take the MMPI Escalator Plan Series 52 as an example. It invests in a basket of shares (BHP Billiton; ENI & NordeaBank) that, in the normal course, would leave investors wide open to serious capital losses if the shares fell in value. Ordinarily, investing in stock-markets does not provide any capital security whatsoever. But Series 52 offers several layers of protection. 100% of invested capital is returned if any one share finishes above its initial level. So, two shares could fall in value or, indeed, the average performance of the basket could be lower – but that won’t matter – once any one of the shares finishes higher, 100% of invested capital is returned.
Additional layers of protection are provided where all three shares fall in value. In this situation, 100% of invested capital is returned provided none of the shares falls by 50% or more. And even if such a calamity did present itself then at least 30% of the invested capital is fully protected anyway. In a nutshell Series 52 provides full conditional capital protection in a number of permutations and in an absolute worst –case scenario it protects 30% of the invested capital.
With a standard stock-market investment there is 0% capital protection aligned with the potential for unlimited gains. The pay-off in Series 52 is that the maximum gain is limited to a very respectable 48.50%. This thoughtful, innovative product certainly warrants further consideration.
You MAY ONLY subscribe to the investment if you have read the Product Brochure where a full list of relevant WARNINGS is provided.