This capital-protected bond is linked to the FTSE 100 or a combination of the FTSE 100 and Nikkei 225 over six years.
Lowes Financial Management managing director Ian Lowes says this is a variation of a structure that NDFA has used on a regular basis for the past two years. “Previous issues have offered one option linked to the FTSE 100 and Nikkei 225 but this time only a link to the FTSE 100 has been added. Clearly, the pricing environment, which has steadily improved, has enabled it to offer the new option to complement the dual index version,” he says.
Lowes likes the kick-out structure as he thinks it offers the potential for a very good return without the indices having to grow much. He says: “Both options have 50 per cent downside protection, meaning that the indices would need to halve before any money can be lost.”
High volatility has enabled NDFA to offer the potential for an 11 per cent annual return under option one and 18 per cent under option two. Lowes says: “In respect of option one, these are the highest returns we have seen for this style of investment.”
He says the potential returns are attractive for clients seeking a fixed level of growth potentially payable after only one year with the benefit of considerable protection against markets falling. “The plan can be held in all the usual tax wrappers. For direct investments, any growth received is subject to capital gains tax which should be attractive to many investors,” says Lowes.
The literature gets praise as Lowes finds it clearly laid out with the benefits and risks clearly explained. Commission is standard for this type of plan. “There are no explicit charges. Implicit charges are no more than 6 per cent including commission. For a six-year product, this represents very good value,” says Lowes.
He expects competition to come from Barclays which has a five-year FTSE 100-linked plan offering 10 per cent. Meteor, which has a plan using the FTSE and EuroStoxx 50 indices to provide returns of 16 per cent a year, is also seen as a competitor.
Aim: Growth by investing in companies based or trading in Central, Eastern and Southern Europe, the Middle East and Africa
Minimum investment: Lump sum £1,000, monthly £50
Investment split: 100% in Central, Eastern and Southern Europe, the Middle East and Africa
Isa link: Yes
Pep transfers: Yes
Charges: Initial 3.5%, annual 1.5%
Special offer: Initial charged reduced to 3%
Offer period: Until February 1, 2008
Commission: Initial 3%, renewal 0.5%
Tel: 0800 414181
Type: Venture capital trust
Aim: Growth by investing initially in non-qualifying fixedincome and quoted mid-cap equity portfolios, then in qualifying unquoted companies
Minimum investment: Lump sum £5,000
Closing date: April 4, 2008
Charges: Initial 5.5%, annual 2.5%, performance fee 20%
Commission: Initial 2.5%, renewal 0.5%
Tel: 020 7553 2345 Type: Capital-protected bond
Aim: Growth linked to performance of the FTSE 100 index or FTSE 100 and Nikkei 225 indices
Minimum-maximum investment: £10,000-£1m, Isa £7,000
Term: Six years
Return: Option 1 – 11% in year one provided the FTSE 100 is the same or higher than its initial value, 22% in year two, 33% in year three, 44% in year four, 55% in year five or 66% in year six, option 2 – 18% in year one provided the FTSE 100 and Nikkei 225 are the same or higher than their initial values, 36% in year two, 54% in year three, 72% in year four, 90% in year five or 108% in year six
Guarantee: Original capital returned in full provided indices do not fall by more than 50 per cent without returning to at least their starting values at end of term
Closing date: February 20, 2008, February 6, 2008 for Isas/Pep transfers
Commission: Initial 3%
Tel: 01727 734315