Merrill Lynch HSBC is introducing the FTSE 100 growth protected investment product (PIP).
PIP is a capital protected bond designed for cautious investors who also want a degree of exposure to the stockmarket.
It will invest in the FTSE 100 index over a three-year term, with a maximum potential return of up to 35 per cent of any growth in the index. Investors will be able to get at least their original capital back at the end of the term if the index falls in value.
The FTSE 100 index went from 6,116.78 points on July 16, 1998 to 5,517.12 points on 16th July 2001.
PIP can also be used as a reinvestment vehicle for a maturing TESSA. The product is available to anyone who is a member of Merrill Lynch HSBC's investment banking service. It is also available to other investors, but only via the Internet.
Compared to the guaranteed investment bond from the Alliance & Leicester, which also invests in the FTSE 100 index, the Merrill Lynch HSBC product does not offer the same levels of potential return. The Alliance & Leicester product offers 100 per cent of the original capital plus up to 40 per cent of any growth in the index. The fact that it is only available to non-Merrill Lynch HSBC investors via the Internet may also penalise investors without computer access.