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Julian Gibbs

The New Star income or protected capital plan is an excellent new investment product developed with Credit Suisse First Boston. This plan gives investors a choice of a fixed income of 10 per cent a year or 2.25 per cent a quarter, with 50 to 100 per cent capital repayment at maturity or, alternatively, 55 per cent growth with 100 per cent minimum capital repayment at maturity.

While I am not normally in favour of products of this kind linked to individual shares, this one is an exception for four reasons. First, the plan is linked to 50 of the world&#39s biggest companies, which are all constituents of the Dow Jones Global Titans index. These include such household names as BP, Coca-Cola and General Electric.

Second, the plan is for a five-year period, which should be long enough for the stocks of all major companies to be near the initial level or higher. Third, the price of an underlying share can fall by up to 30 per cent from its initial price and, if more than that, recover to its initial price at maturity before there is any loss of capital on the income option.

Finally, and most important, New Star has the right to remove up to four shares out of the 50 before the final year and replace them with shares in the FTSE 100 so that it can get rid of any poor performing shares. To me, it is inconceivable, at current share price levels, that more than two or three shares of the top 50 companies will fall by more than 30 per cent and not recover over five years. With New Star being able to replace the duds, this contract should be safe.

On back-testing, 100 per cent capital repayment would have been achieved on 99.42 per cent of all occasions since 1992. I certainly give this product my seal of approval. Except for a major stockmarket catastrophe, investors should receive the maximum returns.


New chairman for Ilag

The Investment and Life Assurance Group has announced its chairman for 2002-2003 will be Veronica France owner of the business Oak Consultancy. France takes over from outgoing chairman Bill Tonks of Nationwide Building Society. She has been a member of the trade body since the mid 1980s, chairman of its regulations committee in the early […]

A plus from L&G

Legal & General has established protected portfolio plus, a capital protected Isa that is linked to 30 UK stocks for five years.This Isa follows on from the four previous products in the protected portfolio series, but is different in that it offers higher potential growth. Investors will get 120 per cent of the average growth […]


“Yes. It would seem to be.”Dennis Taylor, Dennis Taylor Financial Services“No. Most people do not take too much notice of the rubbish they read in the press.”David Walters, David Walters Financial Services“No. I think people understand what it means.”Susan Varle,Reid Independent Financial Services“No, The name is still a traditional one and I think people are […]

Dual strategy to fight taxation

Don has asked for some advice about whether there is anything he can do to take advantage of his foreign domicile.He is employed by a US company and is based in the UK. However, about one-third of his work is carried out on the Continent, where his employer has no direct representation. There are certainly […]


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