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Second outing for Jubilee's inflation plus

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Jubilee Financial Products has introduced the second issue of its inflation plus plan, a structured product that links the investment returns to
inflation and capital protection to the FTSE 100 index

Inflation plus plan 2 has a term of five years and nine months. At maturity, it will provide a return equivalent to 185 per cent of the growth in the UK Retail Price index between October 2011 and July 2017.  Investors will also receive their original capital back in full at the end of the term, provided the FTSE 100 does not fall by more than 50 per cent by the final day of the product’s term. If this safety net is breached, investors will lose 1 per cent of their capital for every 1 per fall in the index.

Jubilee is also offering a deposit version, inflation deposit issue two, for investors who are more cautious about issues of capital protection and counterparty risk.

Structured deposits are cash-based products that provide greater security than structured investments in that the return of capital never depends on the underlying asset performance and Financial Services Compensation Scheme protection will apply to eligible investors if the deposit taker goes bust. However, returns tend to lower than structured investments, so the deposit version offers 100 per cent of the growth in the UK Retail Price index over the same period as the inflation plus plan. Investors will also receive their original capital back in full at the end of the term, regardless of the index performance.

Jubilee says inflation expected to remain high over the short to medium term. It says high inflation has been caused by increased prices of goods and services from emerging markets and from substantially higher oil and commodity prices, so there is little that the UK authorities can do to combat this form of inflation. This plan, along with the deposit version, offers some protection from high UK inflation but returns will be impacted if inflation has fallen by the end of the product term.

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