Birmingham Midshires is offering a capital protected Isa that is linked to the FTSE 100 index over a five-year term.
The Birmingham Midshires 5-year tracker guaranteed investment Isa (issue 8) is available as a mini cash Isa and as a Tessa only Isa. It offers investors the return of their original capital after five years, whatever happens to the FTSE 100 index. Investors also receive 100 per cent of the growth in the FTSE 100 index.
The returns are based on the difference between the initial index level and maturity index level. The initial index level is based on the average closing level of the FTSE 100 index during the first three months. The maturity index level is based on the average closing level of the index during the final year of the term.
The Birmingham Midshires product compares favourably to similar products such as Bristol & Wests global GEB mini Cash Isa 5 year issue 1 in that its growth potential is not capped. The Bristol & West product caps growth at 70 per cent, but this is an average of the performance of four indices.
While the Birmingham Midshires does not have the geographical diversity of four indices, it also means that investors are not taking a risk that the returns of the FTSE 100 index may be dragged down by the performance of other, less familiar indices.