Morgan Stanley has launched a FTSE Gilt-Backed Growth Plan 6, offering investors 7.25 per cent per annum, paid on the first anniversary that the FTSE records flat or positive performance.

This plan is intended to appeal to investors keen to minimise exposure to credit risk as both repayment of capital and any returns are collateralised. Morgan Stanley will post cash or UK government bonds as collateral to the full value of the plan in a segregated account on a daily basis. This collateral can only be used to provide the returns for the plan and not for any other Morgan Stanley obligations.

“The FTSE Gilt-Backed Growth Plan 6 is suited to investors who are slightly bullish or neutral but with no firm view on timing, but who also want a certain level of buffering against potential market falls,” said Sophie Barnett, a vice president at Morgan Stanley.