Investlife Luxembourg, a sister company of Pinnacle Insurance, has unveiled the second edition of its premier income and growth bond.
This is linked to the performance of eight industry sectors across Europe including the UK over a five-year term. It tracks the performance of the largest stocks in the banks, chemical, energy, food & beverages, health, insurance, media, and telecoms sectors.
Investors can choose annual income of 10 per cent, quarterly income of 2.3 per cent or growth at 60 per cent at the end of the term. The income options are slightly lower than the first edition offered in October last year. The previous options were annual income at 10.25 per cent annual and quarterly income of 2.4 per cent but the growth option remains unchanged.
The level of all eight sectors is recorded at the start of the term and again at the end. If, at the end of the term, the worst performing sector is at the same level or higher than at the start, investors get their capital back along with income or growth payments. But if the worst performing sector is lower at the end of the term, growth investors get their original capital while income investors get their capital back less the income they have already received.
Income may be a priority for some investors and they may be looking for a product like this because interest rates on savings accounts are low and stockmarkets are still uncertain. However, the price investors pay for capital protection is the risk coming away with only their original investment and they could miss out on potentially higher returns elsewhere if stockmarket conditions and interest rates change within the next five years.