Bristol & West has introduced another tranche of the global income and growth bond which combines a guaranteed equity bond with a high-interest account during a seven-year period.
Investors can place up to half of their investment in the high-interest account element which pays interest at 5.84 per cent gross a month. There are no penalties for investors who want to make withdrawals during the term.
The guaranteed equity bond element of the product is linked to four stockmarket indices the FTSE 100, Eurostoxx 50, Nikkei 225 and the Swiss Market Index. Investors will get all their original capital returned at the end of the term under this element, plus 80 per cent of the average growth in the indices.
To calculate the returns, the starting level, based on the average monthly closing levels of the indices in the first year, is compared with the average monthly closing levels during the final year.
Investors who want income and growth may consider combination products such as this because some guaranteed equity bonds, such as Keydata's extra income plan, come with a conditional capital guarantee that could result in capital erosion.
The Bristol & West product has a longer term than the norm for guaranteed equity bonds and this is particularly notable in relation to the high-interest account. However, a seven-year term may be too long for some investors, despite the penalty-free access to the high-interest account element throughout the term.