The bond is linked to the performance of the Dow Jones Eurostoxx 50 index, which is made up of 50 of the biggest companies in European countries using the euro currency.
The plan has a six-year term but has the potential to mature early during each anniversary, depending on the performance of the index. If the index level is at or above its starting level at the end of year one, the product will mature with a return of 10 per cent of the original investment. If this does not happen, the product will continue until the next year. Returns of 20 per cent, 30 per cent, 40 per cent, 50 per cent and 60 per cent are payable at each anniversary date respectively.
Investors will also receive a full capital return provided the index does not fall by more than 50 per cent without recovering to at least its starting level by maturity. If this safety net is breached, investors will lose 1 per cent of their capital for every 1 per cent drop in the index.
According to the Structured Retail Products adviser website, this product is unique in that it is linked solely to the Dow Jones Eurostoxx 50 index over six years. Other products that are currently available are linked to a basket of indices that include the Dow Jones Eurostoxx 50 for a term of three years and six months to five years and six months.
The only other products linked solely to the index are Natwest International’s quartet guaranteed stockmarket bond 4 and Standard Bank Offshore’s structured growth solutions European growth accelerator. However, as offshore products with shorter investment terms than Premier’s, they do not provide a good comparison.
As a unique product, Premier’s plan may find a place among investors who are looking for capital protected exposure to Europe excluding the UK. However, it does not offer full protection as it depends on the 50 per cent barrier, which could put off investors at the very cautious end of the spectrum.
While the potential for early maturity could be attractive, the product may be unsuitable for investors who are not willing to tie their money up for the full six years, as early maturity is not a certainty.