This capital protected bond is part of Barclays’ revamped structured product range. It pays out income of 8 per cent a year or 1.95 per cent per quarter. For investors who prefer a growth option, the product provides a return of up to 55 per cent at the end of the investment term.
Investors will also receive a full capital return unless the index falls by 40 per cent and fails to recover to its initial level by maturity. If this safety net is breached, investors will lose 1 per cent of their capital for every 1 per cent fall in the index.
Barclays says that a number of income plans will be maturing in the coming months and has positioned this as rollover product for investors looking for a similar home for their money.
According to the Structured Retail Products adviser websites, this plan is unique in that it provides income and growth linked exclusively to the Dow Jones Eurostoxx 50.
An alternative is the Keydata extra income plan 14, a five-year income product that is linked to the Dow Jones Eurostoxx 50 and the FTSE 100 index. The inclusion of the FTSE 100 index may provide a comfort factor to investors that the Barclays product lacks, but this also affects the pricing. Keydata’s returns are slightly lower at 7.25 per cent a year, 1.7625 per cent a quarter or growth at 41 per cent at the end of the term.
In terms of capital protection, Keydata’s safety net, known as soft protection, is slightly better as investors will receive a full capital return unless the indices fall by more than 50 per cent. However, this is offset by the fact that there are two indices, so investors risk losing capital even if one index performs well.