Baronworth Investment Services is going for the twin-track approach with the introduction of the Baronworth combination investment series four.
Investors have a choice where to invest. Their money can be placed in the three-year guaranteed income bond from Pinnacle Insurance, which offers a fixed rate of 5.75 per cent for three years with the original capital guaranteed to be returned at the end, as long as they stay in for the three year period.
Alternatively they can put their money in the Legal & General with-profits income bond. This also pays a rate of 5.75 per cent, but this is only fixed until the end of December 2002. Investors can choose just one of the two bonds or could invest in both.
Like the other three products in the combination series, this is a unique product as there are no other bonds on the market that offer anything similar. However, clients must be aware that they need to keep their money in this for the long term or they will lose out to exit fees.
The Legal & General bond has exit penalties of 7 per cent of the investment in the first year, reducing by 1 per cent a year to 4 per cent in year four. In year five it reduces to 2 per cent. Pinnacle has no set exit fees but does warn that investors might not get their original capital back.