Demand prompts second Morgan Stanley gilt-backed plan

Morgan Stanley has unveiled the second version of its gilt-backed growth plan, after the first tranche smashed the bank's UK retail sales records in structured products. The FTSE Defensive Gilt-Backed Growth Plan, which was launched in February 2009, enjoyed the biggest sales Morgan Stanley has seen since its retail structured product distribution began in July 2003.

The product uses the same arrangements as the previous tranche to mitigate credit risk. Triple-A rated UK gilts are used as the underlying bond, while cash collateral is posted daily into a segregated account to secure the returns provided by the derivative component. As gilt yields have recently narrowed, the plan's headline rate will be 1.75% lower than that of its predecessor. However, the bank believes the product is still highly competitive in the market, and advisor feedback indicates that