The savings account will provide 5 per cent gross interest after one year, plus the return of the capital invested in that element. The guaranteed equity bond will provide 50 per cent of the growth in the underlying index, with a full capital return on this half of the investment regardless of index performance.
The guaranteed equity bond element is linked to the UK Balanced Sector, RBS Environment Strategy and/or RBS Commodity Strategy indices. Gilliat says investors may choose more than one index to increase diversification, subject to the overall minimum investment of £3,000.
This product could appeal to investors who are looking for an alternative to building society accounts that are unattractive in the low interest rate environment. The interest rate of 5 per cent after one year is higher than available on standalone fixed term deposit accounts, but being part of a longer-term bundled product will not appeal to some people.
The choice of underlying index to provide exposure to different asset classes may be useful but some investors may prefer more familiar indices such as the FTSE 100. The inability to vary the split between the two elements may also be seen as a potential drawback.