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Arc returns to fixed income plan

Arc Capital & income has introduced its fourth fixed income plan, a capital-protected bond that provides monthly or annual income during a term of five years and three weeks.

The bond is linked to the performance of the FTSE 100, S&P 500 and Nikkei 225 indices and gives investors a choice of a cautious income or higher income option.

The cautious income option pays 7.5 per cent a year or 0.61 per cent a month. Investors will also get their original capital back provided all the indices finish at or above their initial levels by the end of thee term. If at least one index falls by more than 50 per cent and does not recover to at least its initial level, investors will lose 1 per cent of their capital for every 1 per cent fall in the worst performing index.

As its name suggests, the higher income option pays out a higher level of income than the cautious option but this is matched by a lower degree of capital protection. Investors will get 9 per cent income a year or 0.73 per cent a month. The capital protection is similar to the cautious income option except that the soft protection is set at 30 per cent rather than 50 per cent.

To calculate the returns, the closing level of each index is recorded on March 20, 2008 and measured against their respective closing levels on March 20, 2013. However, investors will receive no income between the date the final index levels are taken and the maturity date of April 2, 2008.

According to the product database on the Structured Retail Products adviser website, this product is unique as it is the only income product linked to the FTSE 100, S&P 500 and Nikkei 225 indices.

It is possible to get income of 7 per cent a year, 1.72 per cent a quarter or growth of 38.7 per cent after five years from Keydata’s extra income plan. This is linked to the performance of the FTSE 100 and Dow Jones Eurostoxx 50 index. Although the income is lower than the cautious option of the Arc product, the 50 per cent soft protection depends on fewer indices meeting the performance criteria.

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