NDF Administration has established the 11th edition of its extra income and growth plan.
This guaranteed equity bond has a term of three years and two months. It gives investors a choice between growth of 33 per cent, annual income of 10 per cent or monthly income of 0.78 per cent.
It tracks the performance of the Dow Jones Eurostoxx 50 and investors will get their original capital back provided the index does not fall by more than 20 per cent during the term. If it does, investors will still get their original capital back where it recovers to at least the initial level by the end of the term.
However, where it falls by between 20 per cent and 30 per cent during the term and fails to recover by the end, capital will be reduced by 1 per cent for every 1 per cent fall in the index. Greater capital erosion will occur for falls of more than 30 per cent where the index does not recover to its initial level.
In this case, the capital will be reduced by 2 per cent for each 1 per cent fall in the index if the income options are chosen. Investors who choose the growth option will suffer a reduction of 2.66 per cent for every 1 per cent fall in the index, which is a slightly lower rate than the previous edition.
The product could suit investors who are looking for a high level of income or a fixed level of growth with some degree of capital protection. But income options are paid over three years, when the actual term is two months longer. No payment is made during those two months, so the headline rates work out lower when taking the full investment term into consideration.