In a move to give investors more protection in a volatile market, Morgan Stanley announced yesterday that it has launched a new income and growth plan based on the FTSE 100 Index of blue-chip UK stocks.

The FTSE Income Plan 2 offers investors an income of 7.5 per cent annually, regardless of how the FTSE 100 Index performs, bar certain conditions. If markets fall the plan will repay the initial investment in full at maturity as long as the FTSE 100 Index level remains above 50 per cent of its level at the start date of the plan. The plan also offers an early investment discount on the subscription price equivalent to 0.5 per cent interest per annum.

The FTSE Bonus Growth Plan 2 offers an annual return of 11.25 per cent, paid on the first annual anniversary when the FTSE 100 Index is above the level of its plan start date. At this point investors will have the opportunity to exit the plan and receive the return of their initial investment plus the fixed return. In the case of a negative performance on any of the anniversaries, the plan will offer protection down to a given level.

“These products have been launched to allow investors the opportunity to benefit from recent volatility spikes and lock in attractive returns, whilst also offering a degree of shelter to their original capital,” said Sophie Barnett, vice president of Morgan Stanley.

Both plans have a six year investment term with a minimum investment of £3000 (around $4,585). The plans will be made available starting 14 July to 25 August 2010. Investors can access both plans through either a SIPP, SASS, or an ISA wrapper.