Last month saw the launch of Nvesta, a specialist financial product provider that designs, implements and manages investment plans for UK investors. It is part of Eurolife Group, a market leader in this sector for many years.
Its first offering is the Capital Secure FTSE plan, which guarantees a 100 per cent capital return plus all the growth of the FTSE 100 index over five years up to a maximum of 70 per cent of the sum invested.
At first glance, it looks exactly the same as the new National Savings bond. However, there is one major difference. All the profit from the National Savings bond is taxable at the investor's highest rate of income tax but the profit on the Nvesta Capital Secure FTSE plan can be completely free of tax if invested in through an Isa or a Pep transfer or if it falls within the investor's CGT allowance.
Nvesta pays commission of 1 per cent. It has also developed a Dynamic Options five-year plan offering 9.5 per cent a year for five years or up to 60 per cent growth. If investments are made outside an Isa or Pep transfer, income investors only pay 10 per cent tax and higher-rate taxpayers 32.5 per cent. Growth investors using their CGT allowance can invest up to £15,096.
The capital return is linked to the FTSE 100, S&P 500 and Nikkei 225 indices. The plan will return the capital in full if no index falls by more than 35 per cent from its level on September 26, 2002 or if an index falls but recovers to at least 95 per cent of its opening level. Market falls of this level are most unlikely in current circumstances as the FTSE 100 and S&P 500 are more than 30 per cent off their highs and the Nikkei 225 is around 70 per cent off its high. Commission is 3 per cent.
Both these plans are highly rated by Future Value Consultants, the independent analyst.