Cahoot has introduced the five-year FTSE growth bond.
This is a guaranteed equity bond aimed at the cautious investor who wants to invest in the stockmarket, but who also does not want to risk any of their original capital.
Over its five-year life, the bond will track the FTSE 100 index, from its starting point on December 3, 2001 to its closing level on December 2, 2006. To smooth out any sudden drops in the index, the final closing level will be the average index level from June 2, 2006 to December 2, 2006.
Investors will be able to get their original capital back, as well as a maximum of 100 per cent of any growth in the index.
Cahoots product is similar to the five-year guaranteed capital equity bond from Britannia Building Society. This also invests in the FTSE 100 index over a five-year period, with the original capital returned in full at the end of the term even if the index falls in value. However, the Britannia product only promises up to 37 per cent of any growth in the FTSE 100, compared to the 100 per cent offered by the cahoot bond.
The FTSE 100 index went from 3,994.7 points on October 10, 1996 to 5,142.7 points on October 10, 2001.