With more than £21bn
in Tessa funds maturing this year, the Tessa-only Isa market has become
huge. But it is unlikely
that investors will get
more than 5 per cent
on average from variable-rate Toisas.
A much better alternative for most investors
is a very popular product called Tessa Triple Plus issued by NDF in asso-
ciation with Credit Suisse First Boston. Many IFAs have quite rightly
recommended it to their clients.
NDF and CSFB are now issuing a new tranche on terms which were agreed
before the base rate cut on May 10. It is linked to the FTSE 100 index and
pays up to 20 per cent growth in any
one year over a five-year period so there is a potential for 100 per
cent tax-free growth.
Unlike most stockmarket-linked plans, it provides 100 per cent capital
security at all times.
With nearly all forecasters expecting the FTSE 100 to rise by at least 10
per cent from current levels, with some predicting gains of 20 per cent or
more over the next 12 months, this looks to be an extremely sensible
investment at current levels.
Two other points worth noting are that, in addition to the investor's
maturing Tessa capital of £9,000 being invested, another £3,000 can be
invested in a mini cash Isa. Also, even if investors have already
transferred their existing Tessa into a Toisa, they can transfer at any
time into Triple Plus.
At present, the highest fixed-rate Isa available is only 6.1 per cent from
Northern Rock Building Society while the highest variable-rate Tessa is 6.5
per cent from Portman Building Society. I expect both rates to fall
With no risk to capital and a far higher potential return than
conventional Toisas, Tessa Triple Plus
is a must for all realistic investors and even for those who are
risk-averse. Three per cent commission is paid to IFAs.