Canada Life International has introduced the Platinum Income bond which aims to cash in on the volatile Nasdaq 100 index over a three-year period.
It is likely to appeal to investors with a wide portfolio who are prepared to risk a bumpy ride chasing high income. But the Nasdaq's recent performance has been poor, which suggests the bond has been introduced at the wrong time.
Canada Life International says the majority of companies listed in the index are leading technology firms rather than flash in the pan dot.coms and it believes the Nasdaq will settle down by the bond's maturity date.
The Premium Income Bond differs from the company's nine similar bonds in that capital is returned in full if the index falls up to 20 per cent below the starting level. This protection rate is higher than many other bonds but it is only compensating for the greater risks involved in technology stocks.
According to Standard & Poor's Micropal, Canada Life International's Mercury North American Sterling fund is ranked 13th out of 85 bonds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to May 25, 2000.