HSBC has unveiled Pep plus, a rollover product for investors in its existing Pep plus that is about to mature.
This personal equity plan (Pep) transfer product only accepts Pep transfers from HSBC's original Pep plus. Under Pep rules, no new money can be added to Peps. so those who want to top up their investments must use another version of the product, Isa plus.
Like Isa plus, Pep plus is linked to the FTSE 100 index by investing in HSBC UK equity growth 3. At the end of the five-year term, investors are guaranteed the return of all their original capital, regardless of how the index performs during the term.
Investors also receive 75 per cent growth in the FTSE 100. To calculate this, the closing level of the index is taken at the start of the investment term. Then, in the final 12 months, the weekly average of the FTSE 100 is recorded and the final return is based on the difference between this figure and the starting level.
The capital guarantee and returns are not dependent on the FTSE reaching or staying at a certain level during the term, which is good news for investors. The FTSE 100 has been going through a rocky patch recently so a five-year term could take investors through to a high point. However, there is a risk that there will be no capital growth if the stockmarket reaches another sticky patch between 2005 and 2006.
According to FTSE, the FTSE 100 rose from 3755.161 points on June 4, 1996 to 5856.496 points on June 4, 2001.