For professional advisers only
For over a decade the 10:10 Plan has been a familiar name in the UK adviser market. It’s now progressed under IDAD, with the same focus on straightforward, single-index autocalls and defined outcomes. If it’s slipped off your research list, the record is worth revisiting.
If you used the 10:10 Plan when it sat with Mariana, or know it by reputation, the substance hasn’t changed. It remains a clear, rules-based investment structure issued by established counterparty banks — designed to help investors focus on defined outcomes rather than market noise.
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It’s a close replica of the FTSE 100, around 99% correlated, the same shares at the same weightings. The difference is dividends: FTSE 100 leaves the bank to price in the risk of dividends falling, a cost passed onto the client in the form of reduced potential return. The CSDI takes a total return approach and then assumes a dividend in line with the long-term average of 3.5%.
The 10:10 Plan is not designed to last ten years; it is designed to have up to ten years if needed. If the required index level is met on an observation date, the Plan can mature early and pay the defined return. The longer maximum term becomes valuable after a severe market setback, because it gives the index more time to recover rather than forcing the outcome at say, year six. That additional time is a core part of the Plan’s risk-management design, while still preserving the potential for early maturity.
Issue 86 is issued and guaranteed by Citigroup Global Markets Ltd, rated A+. Returns and the return of capital depend on their continued solvency. Diversifying across counterparties and observation dates over time helps spread that risk.
A maximum 10-year autocall linked to the FTSE CSDI (FTSE 100 based), issued and guaranteed by Citigroup Global Markets Ltd. First maturity opportunity on the second anniversary (16 Oct 2028).
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Yes. In normal market conditions, the Plan can be surrendered before maturity. However:
No surrender charge applies when the Plan matures following an autocall or at the final maturity date.
No one can predict when the Plan will mature. Maturity occurs only when the relevant trigger level is met on an anniversary observation date.
However, historic analysis of every available FTSE 100 and FTSE CSDI starting point shows that for both options:
These figures are based on historic market data and are provided for information only. They are not a forecast or guarantee of future outcomes.
No 10:10 Plan has ever matured with a loss to capital. Whilst this may provide reassurance, future outcomes cannot be predicted and capital remains at risk.
Looking beyond the actual 10:10 Plan track record, historic analysis of every available FTSE 100 and FTSE CSDI starting point indicates that:
Historic analysis is provided for information only and is not a forecast or guarantee of future outcomes.
The costs of designing, producing, distributing and administering the 10:10 Plan are reflected within the terms of the Plan. This means that each £1 invested is used to determine the Plan return on £1, rather than on a lower amount after charges.
For Issue 86, the cost incorporated in the terms, as shown in the Key Information Documents, is not expected to exceed 2.70% over the full term.
Of this, a fee not expected to exceed 1.5% is payable by the issuer to IDAD for arranging the Plan. This fee contributes towards the costs of designing, producing and distributing the Plan, together with the administration and custody costs payable to James Brearley & Sons.
Adviser charges, where applicable, are agreed separately but can be facilitated at the point of application.
Yes. Adviser charging can be facilitated through the administration process and may be set as either a fixed monetary amount or a percentage of the investment amount.
Any adviser charge should be agreed between the investor and their adviser before the application is submitted.
No ongoing custody or administration charges are payable by the investor where the Plan is held through James Brearley & Sons.
The standard custody and administration costs are allowed for within the terms of the Plan and cover the normal services required for the full term.
Because the additional years are there to protect against poor market timing — not because investors are expected to remain invested for ten years.
Like shorter autocalls, the 10:10 Plan is designed to mature early if the required index level is met on a scheduled observation date. If that happens, investors receive their original capital back, plus the defined return for each year the Plan has been in force. The longer maximum term only becomes relevant if markets are depressed at a point when a shorter autocall might otherwise have reached its final maturity.
This is important. A six-year autocall that reaches final maturity after a prolonged market downturn has no further opportunity to recover. It may return capital only, or, if the index is below the capital protection barrier, return less than the original investment. A ten-year structure gives the same investment more time. If markets are still recovering in year six, the Plan can continue into year seven — and, if necessary, beyond that.
That extra time could make the difference between receiving capital back with no gain and achieving a significantly better outcome a year or two later. It is therefore a core part of the Plan’s design: investors retain the potential for early maturity, but also have additional recovery time if markets are temporarily unfavourable.
The 10:10 Plan may also usually be sold before maturity, subject to normal market conditions and the price available at the time. Where several years of potential coupons have accrued, embedded value is typically reflected in the secondary market price. As such a surrender of a ten year contract after six years could return a positive outcome where a six year contract would have returned capital only.
The FTSE CSDI is used because it allows structuring terms to be set more efficiently, reducing issuer cost, which in turn enhances coupons.
The FTSE 100 is a price index. It reflects the share prices of the largest UK-listed companies, but it does not include the dividends those companies pay. When a bank structures an autocall linked to the FTSE 100, it must make an assumption about the future dividend stream over the life of the investment. Because future dividends are uncertain, the bank will normally take a cautious view. That caution is reflected in the pricing of the investment and can reduce the coupon available to investors.
The FTSE CSDI takes a different approach. It tracks the same 100 companies as the FTSE 100, in the same weightings, but uses a methodology that reflects total return including dividends, and deducts a fixed 3.5% dividend amount each year – this being the long term average dividend yield.
In simple terms, using the FTSE CSDI moves the dividend uncertainty from the bank’s pricing assumption into the index methodology. If dividends are broadly in line with 3.5%, the index should behave broadly like the FTSE 100. If dividends are lower, the index may lag; if they are higher, it may benefit. But because the bank is not having to price in the same level of dividend uncertainty, the potential coupon can be higher.
That is the trade-off. The FTSE CSDI is not “better” than the FTSE 100 in every respect, and it will not track it exactly. But for an autocall, where the objective is a defined return, rather than direct equity ownership or dividend income, it is a more efficient underlying index.
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