The bond also offers investors their original capital back at the end of the term but only if the FTSE 100 index does not fall by more than 50 per cent during the term without recovering to at least its starting level by the end of the term. If this condition is breached, investors will lose 1 per cent of their capital for every 1 per cent fall in the index.
The accelerated growth plan from Woolwich Plan Managers is a similar product offering offers the potential for geared returns relative to the performance of the FTSE 100 after six years. Although the gearing is higher at 1,000 per cent, the cap is lower at 60 per cent. Investors will get the full benefit of the gearing if the rise in the index is no more than 6 per cent but the Keydata plan will pass on more growth than the Woolwich Plan if the index rises by larger amounts.
The full benefit of the gearing is passed onto investors with Keydata if the index rises by up to 50 per cent, as after this level the cap is reached. For example, a 6 per cent increase in the index would provide 12 per cent growth with the Keydata product and 60 per cent growth with the Woolwich product. But if the index rose by 50 per cent, investors would get 100 per cent with Keydata and 60 per cent with the Woolwich product.
Finally, the Woolwich product has a lower barrier level of 40 per cent, so if the index falls by more than this investors will lose capital at the same rate as the Keydata product but with slightly less protection.