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HSBC gears up for performance plus

HSBC Bank is aiming its latest performance plus individual savings account (Isa) at investors who are looking to reinvest their maturing Tessas.

The Isa is linked to the performance of the FTSE 100 index and returns the original capital at the end of the five-year term. Investors also get up to 45 per cent of the average growth of the FTSE 100 at the end of the term.

To calculate this, the average level of the index over two days at the start of the term is measured against an average taken during the last 12 months. If the index has risen by anything up to 45 per cent, investors will get this percentage of growth. But if the index rises by more than 45 per cent, the final return is capped at 45 per cent.

This product may suit investors with maturing Tessas who want higher returns than they would get from a savings account but who are unwilling to risk the capital they have built up by investing in the stockmarket without a capital guarantee.

Leeds & Holbeck has also introduced a Tessa Isa, the secure growth account, which is again linked to the FTSE 100 index. However, it differs from the HSBC product by offering a minimum return of 10 per cent on top of the original capital whatever happens to the index during a six-year term. The maximum growth potential this product offers is 60 per cent.

Investors who are looking for a home for their maturing Tessa money would need to consider whether it is worth tying their money up for an extra year with Leeds & Holbeck to get a guaranteed minimum level of a return and higher growth potential compared with the HSBC product.

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