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B&W Isas investment cake

Bristol & West is offering a stockmarket-linked cash Isa that tracks the FTSE 100, Eurostoxx 50 and Nikkei 225 indices over a five-year term.

The five-year guaranteed equity bond cash Isa offers investors with at least £500 the return of their original capital regardless of the performance of the three indices. However, there is a 70 per cent cap on the growth that investors receive at the end of the term.

At the start of the term, the level of each index is recorded and this is compared with an average taken over the last 12 months of the term. Seventy per cent of any growth in each index is then added together and divided by three, giving an average which forms the final level of return.

This way of calculating the return is designed to remedy the potential problem of sudden movements in the indices towards the later stages of the term. However, it means investors will not get the full benefit of sharp upward movements although they are protected from sharp downward movements.

The Isa is likely to be suitable for investors who usually put their money in building society accounts but who are now willing to tie some of their investment up for five years to receive higher returns. Equity investors who do not want to put all their money directly into stocks and shares may also find it appealing, but the 70 per cent cap on growth may not be high enough to tempt some investors.

The FTSE 100 index rose from 3963.025 points on December 6, 1996 to 5369.780 points on December 6, 2001.


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