It is much lower risk than income bonds with capital returns based on stockmarkets and is particularly attractive to IFAs because it pays trail commission.The capital return depends on a portfolio of insurance companies’ corporate protection policies. These are taken out by companies to insure against key staff members or shareholders. Unlike the UK, these US and Canadian policies are whole of life, so when they are no longer needed, they can be sold. All contracts have a minimum credit rating of A on Standard & Poor’s and 90 per cent of them are AA or above. The security is based on an actuarial model devel- oped by KPMG and a leading US institutional actuary. The risks are widely spread. HSBC oversees the trading of the contracts and assesses their credit rating and a leading Luxemburg bank acts as custodian. Deutsche Bank provides a facility to lend cash against the policies to provide the cashflow. Because of all the parties concerned and the strong security behind the bond, this is by far the best income contract available and has attracted a great deal of money so far. A second tranche is now open and will close on November 4 with Pep transfers closing on October 21. It pays 7.5 per cent annual income over five years. The income can be reinv- ested for growth and give a return of 43.5 per cent.