GE Life's capital secure investment plan is a capital-protected bond that is linked to the FTSE 100 index and the Halifax House Prices Index over a six-year term.
Investors in this product receive their original capital back regardless of how the indices perform and also get 100 per cent of the average growth across both indices. When calculating the returns, the closing level of the FTSE 100 index is recorded on May 18, 2004 and is compared with the average closing levels between June 2009 and May 2010. For the Halifax House Price Index, data published in May 2004 covering the previous month will be used and compared with the average published levels between May 2009 to April 2010.
Newcastle Building Society is offering two similar product, issues three and four of the guaranteed mixed asset bond, but both have a five-year term. Like GE Life's product,, issue four of Newcastle's guaranteed mixed asset bond offers 100 per cent of the growth in the FTSE 100 index and Halifax Price Index. It also has 12-month averaging at the end of the term, with the obvious difference being that the term is one year shorter than GE Life's product. The Newcastle product may have more appeal as some investors may feel six years is too long a period to tie up their money.
Issue three of Newcastle's guaranteed mixed asset bond has an extra twist as it places 33 per cent of investors' capital into a one-year fixed rate bond that pays 5.5 per cent gross. The remainder is placed into the mixed asset bond but investors who choose this product will get only 75 per cent growth at the end of the term.