Keydatas secure income bond sold 4m in its first 3 days of launch last week, the highest uptake of any product launched by the provider.
The bond aims to pay 7.5 per cent annual income over a five year term without relying on equities. It invests instead in a mix of cash and corporate protection insurance policies, and is designed to appeal to investors looking for income but who are put off by the perceived risk of equity or high yield bond investing.
It buys the insurance contracts from companies when the insured individuals retire. The policies mature when the employees eventually die and are priced on a KPMG model that is stress-tested every six months to ensure its accuracy.
Cash within the bond is used to service and purchase further contracts. It is issued through MeesPierson Intertrust, a Luxembourg-based trust company and subsidiary of Fortis Bank. The bond offers trail commission despite being a closed ended product allowing IFAs to rebate initial commission and switch clients money out of equity products without commission penalties. Minimum investment is 4,000 with the fund closing on September 16 2005.