Legal & General has brought in the performance bond individual savings account (ISA)
The ISA is aimed at investors who are looking for either income or growth from their investment. Investors can opt for either an income of seven per cent a year or growth of 40 per cent over a five year term.
The product tracks the performance of the FTSE 100 index over the term. If the index falls in value and then returns to its starting value or above, the investor will get their original capital back plus the 40 per cent. However if the index fails to recover, then although the 40 per cent return is guaranteed, the original capital will fall in direct proportion to the fall in the index.
Although growth of 40 per cent is attractive, the fact that the capital is not guaranteed will put off some investors from this product.
The FTSE 100 index went from a level of 3740 points on February 23, 1996 to 5943 on February 23, 2001.