Keydata Investment Services has established the FTSE lock-in Tessa-only Isa (Toisa), which guarantees the return of investors original capital at the end of a five-year term, whatever happens to the index.
Investors with the £3,000 minimum investment earn an early bird interest rate of 4 per cent, which is paid up until the start of the term on September 20, 2002. At the end of the term on September 20, 2007, investors get all of the first 25 per cent growth in the FTSE 100 index. They will get half of any growth in the index above 25 per cent, subject to an overall maximum of half their original capital. If the index rises by 25 per cent at any point during the term, this can be locked in, providing a minimum return of 125 per cent.
Bristol & West has a similar five-year Toisa, but differs from the Keydata product in that it offers 70 per cent of growth averaged across the Eurostoxx 50, Nikkei 225 and Swiss Market Index, in addition to the FTSE 100 index. Although Bristol & West has the advantage of geographical diversity, the Keydata product has the benefit of a lock-in facility.
Also, if the FTSE 100 rises by 25 per cent Keydata investors would get all this growth, but Bristol &West investors would get 70 per cent of this increase, which is 17.5 per cent. However, Bristol & Wests returns may be boosted by the performance of the other indices, whereas Keydata investors are putting all their eggs in the FTSE 100 basket.