M&G has introduced its second protected Isa The M&G Protected ISA, adding to the small but growing number of these products.
The M&G protected Isa can be a mini or a maxi Isa and will run for five years, tracking the FTSE 100 index. It is aimed at two different types of investors. Firstly, it is targeted at novice investors, who have not invested on the stockmarket before and who are cautious about risking their capital. Secondly, experienced investors approaching retirement who are looking for a secure place to put their money.
Investors who keep their funds in the Isa for the full five years will receive up to 100 per cent of any growth in the FTSE 100 index, subject to a maximum amount of 61 per cent of their original investment. In the event that the FTSE 100 does not rise over the term then investors will at least get their original investment back.
The capital protection element will appeal to many investors, as will the potential for 100 per cent of the growth in the FTSE 100. However similar funds, such as the Abbey National safety plus growth Isa, work in a slightly different way, allowing up to 60 per cent growth in the FTSE 100 index subject to no maximum percentage of the original investment. Although M&G has turned this around, the end result is that the product works in a similar way to its competitors.
Over a five year period the FTSE 100 index grew from 3515.9 points on August 23, 1995 to 6566.24 points on August 23, 2000.