Abbey for Intermediaries is offering IFAs and their clients a second issue of the Abbey growth options plan.
This 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 56 per cent. This is calculated by comparing the closing value of the index on November 12, 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 28 per cent growth in the index, which means if the index ever rises by 28 per cent at any point during the term, investors will get 28 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 a fixed return of 28 per cent.
Citigroup's enhanced growth plan III is a similar six-year FTSE 100-linked plan with a choice of two options. Option one offers a full capital return regardless of index performance plus 105 per cent of any rise in the index - a return which is slightly higher than the Abbey plan.
However, its second option has an early maturity feature which will offer a fixed return of 30 per cent only of the FTSE 100 index has risen by at least 30 per cent by the third year. Otherwise investors will get 130 per cent of any increase in the index. This is more uncertain than the second option of Abbey's plan and will appeal to a different type of investor.