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L&G goes beyond bare minimum

Legal & General has established a fourth issue of the protected capital and growth plan 2, a FTSE 100 linked guaranteed equity bond that provides a full capital return plus a minimum level of growth after six years.

The bond will provide the greater of a 25 per cent return of the original investment or 50 per cent growth in the index at the end of the term. To calculate the returns, the closing level of the index is recorded on July 6, 2005 and compared with an average produced over the last 12 months of the term.

This type of product sits at the more cautious end of the structured products risk spectrum because not only is the original capital returned at maturity, it alleviates the risk of investors coming away with only their original capital and no growth on top of this.

According to the StructuredRetailProdocts online products database, the Woolwich Capital Plus plan issue six is an identical product to the L&G product. However, it is possible to have a higher participation rate of 100 per cent of the rise in the FTSE 100 index through Nvestas tracker plus plan . But the minimum level of growth in the Nvesta plan is lower than Woolwich and L&G at 10 per cent of the original investment.

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