View more on these topics

Breaks down on Widows

Scottish Widows

Guaranteed Investment Bond

Type: Guaranteed equity bond

Aim: Growth linked to the performance of the FTSE 100 index

Minimum-maximum investment: 2,000-100,000

Term: Five years and six months

Return: 75% of the growth in the index at the end of the term

Guarantee: Original capital returned in full regardless of the performance of the index

Closing date: September 11, 2005

Commission: Initial 3%

Tel: 0845 600 8910

The Scottish Widows guaranteed investment bond is a FTSE 100-linked guaranteed equity bond with a term of five years and six months. It provides a full capital return regardless of the performance of the index plus 75 per cent of the growth in the index at the end of the term.

Considering in what ways the product is good for IFAs and their clients, Bright Financial Services Paul Breaks says: “This is a five and a half year capital guaranteed investment with growth linked to the FTSE 100 index. It is very easy to understand product and the literature is also easy to understand.” He also mentions the fact that there is no further tax liability for basic rate taxpayers as good.

Turning to the potential drawbacks of the product Breaks says: “It only provides 75 per cent of the growth in the FTSE 100 index and investors do benefit from dividend income. Investments in this product are subject to bond taxation, so it unlikely to be suitable for non tax-payers as there are more tax efficient investments available elsewhere.”

Breaks then turns his attention to other products which may provide competition. He says: “Keydata offers a six- year plan, which provides 200 per cent of any growth in the FTSE 100 index. It offers capital security providing the index does not fall by more than 50 per cent from its starting level or falls by more but recovers to the starting level. This product is liable for capital gains tax, which means many investors will be able to use their annual allowance.”

He also cites a capital-protected product from Zurich which offers 100 per cent of any growth in the FTSE 100, or if the FTSE falls by no more than 50 per cent, the amount it has fallen by is added to the original investment. “This plan is income tax assessed so it is great for non taxpayers,” says Breaks.

Summing up Breaks says: “Given strong performance of equity markets, many clients now happy to invest directly into equities without the need to fully guarantee 100 per cent of capital at the expense of dividends and flexibility. I am unlikely to recommend this product as there are better similar investments available.”


Suitability to market: Poor
Investment strategy: Poor
Adviser remuneration: Average

Overall 3/10


Dry run planned for Hips in 2006

Home information packs took one more step to becoming a reality as industry bodies agreed with the ODPM on a dry run, to be carried out next year. Approval has also been given to the diploma in home inspection. The partnership is also looking at a not-for-profit certification scheme to oversee the standards of operating […]

McCarthy slams EU over directive

FSA chairman Sir Callum McCarthy has attacked the EU for its handling of the markets in financial instruments directive at the FSA conference last week. He branded the EU irrespon-sible for failing to conduct a cost benefit review before issuing the directive and said it was far from clear that the benefits to the UK […]

Sideways Glance – To the Manoir borne

One of the best investments I ever made was in the Holiday Property Bond, an FSA-regulated investment in a wide selection of international leisure property.

Richard Mayland joins board of Newcastle BS

Richard Mayland, a former partner with PricewaterhouseCoopers, has joined the board of Newcastle Building Society as a non-executive director.Maylad became a partner with PWC in Newcastle in 1976 managing the audit practice in 1999. He has also led a financial services unit for PWC specialising in retail banking and insurance.Since last year he has worked […]

UK housebuilders remain a value trap – despite post-Brexit falls

Despite the sharp drop in housebuilders following the Brexit result, valuations in the highly illiquid market are still at elevated levels. And whilst some investors may take comfort from superficially low price/earnings multiples, are earnings sustainable over the long term, asks Holly Cassell, Assistant Manager of the Neptune UK Mid Cap Fund. Click here to […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm