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Bundling up

Alliance & Leicester has bundled together a fixed-rate savings account with a range of bonds from Legal & General.

Investors in the balanced savings and investment plan must place at least £1,000 in Alliance & Leicester&#39s one-year fixed-rate bond. This is a savings account offering a fixed rate of interest at 6.5 per cent. At least £5,000 must be invested in a Legal & General bond of the investor&#39s choice.

This can be a with-profits bond which invests in a mixture of shares, property, fixed-interest securities and cash, a distribution bond which invests a higher proportion in property than with-profits or a unit-linked investment bond which provides access to 14 funds. These include tracker funds, an ethical fund, fixed-interest funds and actively managed funds in areas such as global growth, UK smaller companies and North America.

The last few months have seen a number of similar investments split between a fixed-rate savings account and a bond. Some of these, such as Northern Rock&#39s balance choices, use Legal & General&#39s with-profits bonds, such as Alliance & Leicester&#39s product, but giving investors the choice between three types of bond is taking this trend one step further.

However, it offers nothing new as investors can also get access to with-profits and unit-linked funds through Leeds & Holbeck&#39s similar combination product, the platinum access bond. This offers a higher rate of interest at 7 per cent gross a year until January 1, 2003.


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