This offshore product offers a full capital return regardless of the performance of the index. It offers 140 per cent of the rise in the index over the term.
To calculate the returns, the closing level of the index is recorded on June 14, 2005 and compared with an average of the closing levels taken during the final year of the term.
One interesting feature of this product is that withdrawals can be made while preserving the full benefits of the original investment. The interest is calculated on the bond at the start date, not on the balance after a withdrawal has been made.
However, withdrawals are subject to a bond access fee which takes into account the length of time remaining on the investment term and the current market conditions. This means the exact amount of any bond withdrawal fee will not be known at the outset.
An example from Bank of Ireland shows that on a £5,000 withdrawal from a £10,000 investment made halfway through the term when the Bank of England base rate is 4.75 per cent, the fee payable is £571.28.
This figure includes the £100 administration fee and will rise to £1,366.21 if the base rate was 5.75 per cent.
According to the Structured Retail Products website, this plan is currently unique in the offshore market as it is the only one with a seven-year term. However, some investors may feel this is too long to tie up their money and may feel the withdrawal facility is too expensive to use.