Why is investing in the Structured Products Fund better than investing in Structured Products Plans?

At Mattioli Woods, we have distributed structured products via plan managers since 2005. The plan manager route for distributing structured products has a number of disadvantages that are solved by creating our Structured Products Fund. With this Fund, the disadvantages of plan investing (counterparty exposure, lack of liquidity and lack of diversification) are removed. Furthermore, the costs for the Fund are much lower than the costs for plan investing, and the administration is much less. The Fund is therefore not only a better way to obtain exposure to structured products as an asset class, but it also represents better value and a more time-efficient solution for clients.

What sort of structured products does the Fund invest in?

We use the leading indices of the following geographical areas for our initial structured product pay-offs: UK, Europe, US, Japan, Switzerland, Sweden, Australia, Canada. As structured products can pay a return if the indices fall, rise or stay the same, the Fund does not necessarily invest in structured products that rely on the indices going up. We could, in time, include structured product pay-offs linked to the following underlying assets in the Fund: equities, commodities, bonds, rates, foreign exchange and mutual funds.

Where can I obtain more information on the Structured Products Fund?

To help you further understand this Fund, please read the Key Investor Information Document (KIID), Supplementary Information Document (SID) and Prospectus, or seek assistance from your Mattioli Woods consultant. You can obtain a copy of the Base Prospectus and the current KIID relating to the Fund and any further information on request from Mattioli Woods or by visiting the Fund Literature page, here. The current value of the fund can be found on the Home page, here. The value of investments within the Structured Products Fund can fall as well as rise and is not guaranteed and you may get back less than you invest.

How can I access the money I have invested in the Fund?

The Fund is made up of units you can buy and sell at any time. Please contact your consultant for more information.

What is 'collateralisation' and how does it work?

The money invested in the Structured Products Fund is used to buy A-rated government bonds. These A-rated government bonds are held in the name of the Fund, providing protection for the Fund from the insolvency of any counterparty the Fund deals with.

How will you keep me informed?

We will write to you to acknowledge your application within five business days. With this advice letter, we will send you a summary of your investment and a notice of cancellation.

Is the Fund covered by the Financial Services Compensation Scheme (FSCS)?

Mattioli Woods plc and Lyxor Funds Solutions S.A. (LFS) are covered by the Financial Services Compensation Scheme (FSCS). Therefore, you may be entitled to compensation from the FSCS in the event that either company is declared in default and you have suffered a loss as a result of its actions or negligence. In this event, the compensation limit is currently £85,000 per person. If the level of your claim against us is greater than £85,000, you would not be covered for the excess. The Fund itself is not a member of the UK Financial Services Compensation Scheme (FSCS), therefore as a UK investor, the Fund will not be protected by the FSCS.

What would happen if Société Générale were to cease trading?

If Société Générale decided that they wanted to withdraw from the current arrangements they have with Mattioli Woods for the Structured Products Fund, they would be contractually obliged to carry on in their current capacity throughout the relevant notice periods. This is intended to give the Management Company and the Board of Directors of the Fund sufficient time to find another bank and/or fund management firm as a suitable replacement for all the functions Société Générale currently provides.

If Société Générale were to become insolvent, the Management Company (Lyxor Funds Solutions S.A. (LFS)) and the Board of Directors of the Fund will go through a process to find a suitable replacement for Société Générale as the investment manager and counterparty with another bank and/or fund management firm. The Fund holds collateral in the form of government bonds and cash with Commerzbank. Any changes to the collateral held are executed by Lyxor Funds Solutions S.A. (LFS).

How is a client’s investment protected in the Fund compared to traditional structured product plans?

The Fund protects our clients’ invested capital and any returns by holding collateral in the form of government bonds; these would be sold and used to repay clients in the event of the insolvency of Société Générale. For traditional structured product plans, there is no counterparty providing the collateral, and it is possible that the counterparty (typically a bank) could collapse or fail to make the payments due to clients. If this happened investors would lose some, or all, of their original investment, as well as any potential payments to which they might otherwise be entitled.

By eliminating this particular risk we have ensured that investors in the Fund are only exposed to the performance of the structured products in the Fund, not the insolvency of a bank.