Keydata Investment Services has followed up its secure growth portfolio with a second issue of the product.
This guaranteed growth bond is linked to a portfolio of six externally managed Oeics over a five-year term. These are Norwich Union UK growth, Norwich Union European equity, JP Morgan Fleming premier equity growth, Newton income, Threadneedle European select growth and Threadneedle American select growth.
The Norwich Union UK growth fund carries the highest weighting of 25 per cent and 20 per cent goes into Newton income. The European and US funds carry lower weightings of around 10 to 15 per cent. To calculate the final return, the monthly price of each fund is averaged out throughout the investment term.
Investors can choose to have 100 per cent of their capital protected, with 100 per cent of the average of any growth in the funds. Alternatively, they can protect 90 per cent of their capital and take 140 per cent of the average growth.
This bond could be attractive to investors who are looking for a taste of stockmarket investment without the potential risk to capital. They should also be prepared to invest for at least five years as penalties are imposed for early surrender, which could erode the original capital. In addition, direct investments in the selected funds could lead to higher returns than investing in them through this bond, especially if share prices swing upwards and the funds perform well.
According to Standard and Poor's the JP Morgan Fleming premier equity growth fund is ranked 102 out of 240, Newton income is ranked 47 out of 240, Norwich European equity of ranked five out of 87, Norwich Union UK growth is ranked 16 out of 240, Threadneedle American select growth is ranked seven out of 76 and Threadneedle European select growth is ranked 16 out of 87 funds, based on £1,000 invested on a bid-to-bid to basis with net income reinvested over three years to January 25, 2002.