Britannia International has established another guaranteed equity bond for the IFA market, the guaranteed growth bond 2.
The bond has a term of five years and six month and is linked to the performance of the FTSE 100 index. At maturity, investors will get their original capital back regardless of the index performance plus the greater of 20 per cent of their original investment or 75 per cent growth in the index.
When calculating the final return, the closing level of the index is recorded at the start of the term and compared with an average taken over the last 12 months of the term.
This product is currently the only offshore structured product linked to the FTSE 100 index for five years and six months. Bank of Scotland International has a similar product but it has a term of five years and is not aimed at the IFA market.
Zurich Bank International's select guaranteed account (offshore) has a term of five years and six months and is aimed at IFAs. However, it differs from the Britannia International product in that it offers investors the choice of linking their investment to the FTSE 100, the Halifax House Prices index or a combination of the two. If they choose to link their investment purely to the FTSE 100 index, they will get a full capital return plus 100 per cent rise in the index.
Although the Zurich product has higher maximum growth potential, the Britannia International product offers more security in that it has a minimum return above the original capital in consideration of its lower growth potential.
Investors who are trying to choose between the products would need to weigh up whether it is worth missing out on the higher growth potential of Zurich's product in favour of the Britannia International product's'minimum return on top of their original capital in the event of no growth in the index.