The fund will be open for investment from January 29 and aims to provide investors with a maximum gross redemption yield of 6.85 per cent per annum and return capital investment in full at the end of the fixed five year term.
The target yield is contingent on the FTSE 100 closing between 3,200 and 7,500 over the entirety of its five year term. Assuming this occurs investors will receive income, paid semi-annually and accrued over rolling six month periods capped at a maximum of 3.37 per cent.
If this does not occur, then returns are adjusted accordingly. For example, if the index closes inside the range on 50 per cent of days within the six month period, then payment will be 50 per cent of the maximum.
Capital will be returned in full at the end of the term as long as the FTSE remains above 3,200 points throughout the period. If the index closes at or below this level on any day during the life, then capital is reduced in value by 1 per cent for each 1 per cent that the final level is below the initial strike level.
Fund distributions should be subject to income tax and the product is suitable for investment within an Isa, Sipp or Ssas and can be invested in an offshore bond.
Managing director of structured products Nick Coghill says: “The accumulated income fund shares a similar strategy to the popular capital fund which we launched last December and also benefits from the liquidity and ease-of-access of the Ucits III structure.”