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HSBC goes for uncertainty factor

HSBC Asset Management has established a guaranteed equity bond that could mature before its six-year term.

The capital protected growth plan is linked to the FTSE 100 and provides a full capital return regardless of its performance. Investors could also receive 100 per cent of any growth in the FTSE 100 at the end of the six-year term, but this would depend on how it performs in the second and fourth years.

If, during the second year of the term, the FTSE 100 index has risen by at least 18 per cent, the bond will mature and investors will get a return of 18 per cent plus their capital.

If this does not happen, the term will roll over until the fourth year. It will mature at this point if the index rises by 36 per cent.

The HSBC product is similar to the Premier select growth plan, which also has a six-year term that could mature earlier. The products both offer a 136 per cent return year four where the FTSE 100 index has risen by 36 per cent, but the HSBC product has fewer points at which the bond can mature.

The earliest the Premier product can mature is in year three. IFAs see this as more suitable maturity date for equity-linked investments than in year two, which could be a possibility with the HSBC product. However, they prefer products that clarify the investment term at the outset.


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