Abbey for Intermediaries has entered the IFA market for structured products following estimates that IFAs had a 60 per cent share of the structured product market in 2003.
The Abbey Growth Options Plan Issue 1 is a guaranteed equity bond linked to the performance of the FTSE 100 index for a six-year term. It has two options that investors can choose. Under option one,
investors get all the average growth in the index up to a maximum of 60 per cent. This is calculated by comparing the closing value of the index on August 6, 2004 with an average produced over the final 12 months of the term.
Investors will benefit from a full capital return regardless of the performance of the index and there is also a lock-in feature. This will protect the first 25 per cent growth in the index, which means if the index ever rises by 25 per cent at any point during the term, investors will get 25 per cent growth on top of their capital return regardless of any subsequent movement in the index.
Option two differs in that there is no lock-in feature - investors will simply get their original capital at the end of the term plus the higher of 25 per cent growth or 50 per cent of any growth in the index.
The Woolwich Capital Plus Plan and Legal & General's Capital Protection Plus Plan are similar products aimed at IFAs but both are due to close shortly. The Abbey product 's option two provides a minimum return of 25 per cent of the initial capital which is the same as the Woolwich product but higher than the minimum return offered by L&G. The maximum available under option two of 50 per cent growth in the index is on a par with the rival products mentioned.
Abbey for Intermediaries differentiates itself due to its lock-in feature but unlike option two and the other plans, the minimum 25 per cent growth it offers depends upon index performance.