The best growth plan yet in current stockmarket conditions is being launched shortly by NDF in conjunction with Abbey National Treasury Services. Called the Double Growth Plan 1, it pays out double the rise in the FTSE 100 index over a five-and-a-half-year period, with a maximum return of 200 per cent.
Full capital repayment is made, unless the index falls by more than 50 per cent during the investment term and fails to recover. While full capital repayment is not guaranteed, it is highly unlikely that the FTSE 100 will fall by a further 50 per cent or more. Furthermore, the FTSE 100 only has to rise by around 7.5 per cent a year for investors to receive the full return, whereas with a direct investment in a tracker fund they would have to get a return of over 13 per cent a year including reinvested income.
Most forecasters expect equities to rise from their current low levels by around 7 to 8 per cent during 2003, despite the possibility of war in Iraq.
Percival Stanion, head of asset allocation at Barings, for example, expects that a gentle economic recovery could lead the way to equities growing by 8 per cent.
The highly respected economics commentator at The Times, Anatole Kaletsky, thinks that 2003 will be a respectable year for most equity markets.
Despite the three-year fall in the FTSE 100, it has achieved an average return of over 7.5 per cent a year over the past 10 years and, from current levels, I expect it to return to this average over the next five years or so.
In my opinion, any growth investor who is prepared to invest for five-and-a-half years should invest in this plan in preference to any tracker fund. NDF also offers a 7 per cent a year income alternative with the same 50 per cent downside protection.