Keydata Investment Services has teamed up with Deutsche Bank to introduce the income & growth generator.
This guaranteed equity bond tracks the performance of the Eurostoxx 50 index over a three-year term. There is an annual income option at 8 per cent gross, quarterly income at 1.95 per cent gross or capital growth at 25 per cent.
Two safety features provide a conditional capital guarantee. The first ensures the original capital is returned in full as long as the level of the index at the end of the term is at least 90 per cent of its starting value. The final index level is based on the average level of the index during the last month of the term.
The second safety feature comes into play if the final index level is between 80 and 90 per cent of the starting level. It ensures the original capital is still returned in this instance, providing the index does not fall by more than 20 per cent during the investment term.
There is a risk of capital erosion if the conditions for both safety features are not met and in this case the capital is reduced by 2.5 per cent for every 1 per cent fall in the index below the 90 per cent threshold.
Keydata Investments does not offer returns as high as products like the current issue of GE Life's high income and growth plan, but this is because it provides more of a cushion against stockmarket falls. In choosing this type of investment, investors would need to weigh up what is more important high returns or a greater level of capital protection.
The Eurostoxx 50 index rose from 2975.02 points on September 3, 1998 to 3595.94 points on September 3, 2001.