Irish Life International has introduced the secured growth bond 9, a guaranteed equity bond that is linked to the performance of the FTSE Eurotop index over a five-year term.
The FTSE Eurotop Index consists of 100 of the largest companies in Europe, including Abbey National, Volkswagen and Swedish clothing retailer Hennes &Mauritz.
Investors can choose to have their bond denominated in sterling or euros and can also have two capital protection options. Protecting 90 per cent of capital produces a return of 140 per cent of the average growth in the index for sterling investments and 125 per cent for euro investments. Capital protection of 100 per cent produces a return of 85 per cent of the growth in the index for sterling investments and 70 per cent for euro investments.
To calculate the returns, the closing level of the FTSE Eurotop index is measured at the start of term and compared with an average of its quarterly levels throughout the term.
The bond's choice of currency and capital protection could make it attractive to offshore investors who are waiting for stronger signs of stockmarket recovery before they invest directly in equities. While many products do not offer a choice of currency or capital protection, some such as Manor Park's range of guaranteed growth funds offer a wider choice of capital protection than Irish Life International, but fail to offer a currency choice.
Irish Life International's use of the FTSE Eurotop 100 index may be more appealing to non-UK residents than FTSE 100-linked bonds. However, UK investors who are looking to invest offshore for tax reasons may prefer the more familiar FTSE 100 index.