Morgan Stanley has launched its FTSE Gilt Backed Plan 5, a new six-year investment product which offers fixed return equivalent to 8 per cent per annum, paid on the first anniversary that the FTSE records flat or positive performance.

Investors are able to exit the plan, receiving back their initial capital plus the fixed return, on the first anniversary of the plan that the index conditions are met. The plan also offers capital protection provided the index has not fallen to below 50 per cent of start value at any point during the plan’s life; if this does occur capital is lost one-to-one with the index.

Morgan Stanley is keen to emphasise that the credit risk of the product is minimal as the bonds purchased to secure the plan’s capital protection are UK government debt. Funds to disburse as returns to investors are in an entirely segregated account, the firm additionally said.

Minimum investment in the plan, which opened for investment on 29 September, is £3,000 ($4,740). Early investors qualify for a discount equivalent to 0.5 per cent per annum.