Keydata Investment Services has established the capital plus account, a Tessa-only Isa (Toisa) that is linked to the FTSE 100 index for five years.
Tessa investments of between £5,000 and £9,000 will receive a return of up to 60 per cent, depending on the performance of the FTSE 100 index. Investors will get at least their original capital back at the end of the term, whatever happens to the index.
To calculate the returns, the five-year term is divided into ten periods of six months. The performance of the index is measured every six months and any rise or fall in the index during each period is capped at 6 per cent.
Some Toisas are linked to more than one stockmarket, with higher growth potential than the Keydata product. One example of this is the Bristol & West five-year guaranteed equity Toisa, which offers investors 70 per cent of he average growth in four indices.
The calculation of the return differs between the two products. The Bristol & West Toisa takes an average of all the index levels on the first day of the term and compares this with an average taken from the last 13 months of the term. While this means poor performance in the middle of the term does not affect the final returns, it also means investors will not benefit from exceptional performance during this period.
However, it would be difficult for the Keydata product to return the maximum growth, since the index would have to rise by at least 6 per cent during every six month period. The FTSE 100 index rose by more than 6 per cent in three out of 12 six month-periods between January 1, 1998 and November 1, 2002.