Northern Rock has introduced the ninth issue of fifty:fifty, a guaranteed equity bond and high interest account packaged within one product.
The guaranteed equity bond element tracks the performance of the FTSE 100 over a five-year period which ends on July 10, 2007. To calculate the returns, the closing level of the FTSE 100 index is recorded at the start of the term and an average is taken during the final year. Investors get 75 per cent of any increase in the index and are guaranteed the return of their original capital, whatever happens to the FTSE 100 index.
The high interest account is a one-year fixed-rate bond paying 10 per cent gross a year until July1, 2003. Withdrawals are allowed during the fixed-rate period, but are subject to the loss of 60 days' interest as a penalty.
The five-year term on the guaranteed equity bond element may suit some investors more than the six-year term of Bristol & West's balanced guaranteed equity bond.
Comparing the high-interest account elements of the products, Northern Rock's 10 per cent fixed rate over one year is generous compared to the 6.5 per cent from Bristol & West over one year. Investors with Bristol & West cannot make any withdrawals from this element, so those who may need emergency cash may prefer the Northern Rock product.
However, Bristol & West's product offers more flexibility than Northern Rock's offering in that investors do not have to split their capital equally between the two elements.