NDF Administration has brought in the extra bonus plan 3, a guaranteed growth bond. The bond has been designed for investors who are looking for short term growth over a 13-month period, and who want to shelter any returns from capital gains tax.
The plan will invest in a Dublin-based investment company, which will in turn invest in the FTSE 100 index.
The plan comes with two options. First, an investor can choose to take 10 per cent growth over a 13-month period. Alternatively they can choose to take an income option of 0.73 per cent a month. The plan is backed by Abbey National Treasury Services.
Both options come with a guarantee that the original capital is repaid as long as the finishing level of the FTSE 100 is not more than 20 per cent lower than the starting level. If the index falls by more than 20 per cent then investors will see their original capital fall by 3.6 per cent for every 1 per cent fall in the index.
Extra bonus plan 3 is similar in structure to the 10.net bond from Scottish Mutual. This product invests in the Nasdaq 100 index, with the original capital returned in full unless the index falls by more than 15 per cent over the three-year term. However the 13-month term of the NDF plan makes it more vulnerable than the Scottish Mutual plan to any short-term falls in the index, as it has less time to recover.
Over a 13-month period the FTSE 100 index went from 6,216.9 points on May 26, 2000 to 5,555.7 points on June 26, 2001.