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B&W bond spans all quarters

Bristol & West has introduced a product which combines a guaranteed equity bond and a high interest account for a term of seven years.

Investors can place up to half of their investment in the high-interest account element. This pays interest at 6 per cent gross a year until October 13, 2009. 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 90 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 NDF’s extra income & growth plan, deliver income, but with a conditional capital guarantee.

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. Other products such as Northern Rock’s fifty:fifty product combine a five-year guaranteed equity bond with a fixed-rate high-interest account of one or two years.

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.

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