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Abbey National plays safe

Abbey National has introduced safety plus growth issue 7, a guaranteed equity bond that provides minimum growth of 20 per cent and maximum growth of 50 per cent over a five-year term.

The bond is linked to the FTSE 100 index and investors get their original capital back, plus their minimum return, whatever happens to the index. The maximum return is 150 per cent, which is 10 per cent lower than the previous issue of the bond.

To calculate the final returns, the average level of the FTSE 100 index is recorded for each six-month period during the term. The growth for each period is capped at 5 per cent, so any increase in the index above this is not passed on to investors. These six-monthly averages are then added together to produce the final return.

Skipton Building Society&#39s five-year guaranteed growth bond is a similar product that also tracks the FTSE 100 for five years. Like the Abbey National bond, the Skipton product guarantees the return of the original capital and a minimum amount on top, whatever happens. The minimum amount is 22 per cent, which is slightly higher than the Abbey National bond.

The Skipton product shares Abbey National&#39s maximum growth potential of 50 per cent, but investors can only lock in 8 per cent growth a year. This compares unfavourably with the Abbey National bonds&#39 ability to lock in 5 per cent every six months. Also, as Skipton&#39s bond is linked to three indices, it may be more difficult for investors to achieve the maximum growth compared to the Abbey National bond.


ECU Group opens up loan service to IFAs

Currency debt manager the ECU Group is offering its mortgage service to IFAs with the aim of helping their clients slash their loans by taking advantage of exchange rate movements.The service tries to reduce the balance of a mortgage by switching part of it to foreign currencies not performing as well as sterling, including the […]

Inside Edge – Andrew Bedford

Since my last article in February, the Leeds United season has gone from average to worse. No turn-round in form or a real change in attitude from the team. No trophies but, I suppose, the same can be said for Manchester United.There is an audience out there that wants to watch the great Leeds&#39 product […]

Outside edge

CP121 has quite rightly occupied most newsprint but CP132, the presentation of past performance and bond yield funds in financial promotions, is also controversial.I think the industry has played right into the hands of the FSA in asking for a slap on the wrists.It has been farcical to have companies advertising top performance over 45 […]

IFAs berate supermarts over Isa and Pep claims

IFAs have criticised fund supermarkets Cofunds and FundsNetwork for advertising Isa and Pep consolidation without having some of the biggest companies signed up to the service.IFAs are concerned that both supermarkets continue to market a consolidation service despite Cofunds not having access to Fidelity and Jupiter not being available through FundsNetwork.As both fund managers are […]

Lifetime ISAs – International Evidence

By Fiona Tait, Pensions Specialist Since the announcement in March, the Lifetime ISA (LISA) has attracted controversy. Heralded as a saviour for the self-employed and the young wanting to get on the housing ladder, the new LISA risks adding confusion for savers trying to fully understand the benefits of new workplace pension savings through auto-enrolment. To […]


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