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B&W combines 7-year fixed rate and GEB

Bristol & West has brought out a sixth issue of the global income and growth GEB which combines a seven-year guaranteed equity bond with a seven-year fixed-term high-interest account.

Investors can place up to half of their investment in the high-interest account element which pays interest at 5.25 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 &#45 the FTSE 100, Eurostoxx 50, Nikkei 225 and the Swiss Market Index. Investors will get their entire original capital returned at the end of the term under this element, plus 70 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 12 months, is compared with the average monthly closing levels during the final 12 months.

Investors who want income and growth may consider combination products such as this because some products offer the choice of income or growth, not both. Also, those with an income option tend to have conditions attached to the return of capital, so they are riskier than the Bristol & West product.

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.

Interest rates are currently low and with this product, investors will be locking themselves into the current rate but they may be able to get better rates over the next seven years.

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