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Keydata bond gives protection choice

Keydata Investment Services has introduced a fifth issue of secure growth portfolio, a guaranteed equity bond that has a five-year term, linked to six funds.

The HSBC UK growth & income, New Star UK growth and Investec European funds carry the highest weighting, each comprising 20 per cent of the portfolio. Threadneedle American select growth and JPMorgan Fleming premier equity growth comprise 15 per cent each and 10 per cent goes into First State Asia Pacific.

To calculate the final return, the monthly price of each fund is averaged out throughout the investment term and investors can choose 80 per cent, 90 per cent or 100 per cent capital protection.

Where 100 per cent of the capital is protected, 100 per cent of the average of any growth in the funds is payable. Protecting 90 per cent of capital gives 150 per cent growth and 80 per cent capital protection gives 200 per cent of the average growth in the funds.

The choice of capital protection is a good feature as some investors are more cautious than others. However, the returns are based on the performance of all six funds. This means the final return could be dragged down by the poor performance of one or two funds, especially if they carry higher weightings than the better performers.

According to Standard and Poor&#39s HSBC UK growth & income, First State Asia Pacific, Investec European and Threadneedle American select growth are first quartile and Threadneedle American select growth is second quartile, based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to July 22, 2002. There is no three-year past performance for New Star UK growth.

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