The bond is linked to the FTSE 100 index and will provide the greater of a 22 per cent 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 March 16, 2005 and compared with an average produced over the last 12 months of the term.
According to the StructuredRetailProdocts online products database, there are currently no similar products available to the IFA distribution channel. However, there are two similar products available via the direct market West Bromwich Building Societys guaranteed bonus tracker bond 3 and Leeds & Holbecks guaranteed capital account 5
The West Bromwich product returns the original capital after six years regardless of the performance of the FTSE 100 index. It also provides the greater of 25 per cent of the original investment or 60 per cent of the rise in the index, which is higher than the L&G product.
Leeds & Holbeck product offers a lower minimum return than both the West Bromwich and L&G products at 16.5 per cent. It is a cliquet product which measures the performance of the index every year. This is subject to a cap of 10 per cent in any year, but this applies to falls as well as rises in the index and means the maximum growth potential is 60 per cent.
However, in comparison with the L&G product, it may be difficult to reach the maximum level of growth because the index would need to rise by at least 10 per cent every year in the term.