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NU moves into structured bond arena

Norwich Union is entering the structured product market with a four-year monthly or annual income bond linked to the DJ Eurostoxx 50 index of leading European companies.

The Prosper bond, which opens for investment this week, guarantees an annual income of 6 per cent paid monthly, annually or as a lump sum on the day before maturity based on the initial investment.

Capital will be repaid in full as long as the Eurostoxx 50 does not fall by more than 20 per cent from its level on November 13 – the date on which the bond&#39s term starts.

If it does fall but returns to at least the starting level by the time the bond matures, then capital will be repaid in full.

However, if the index breaches the 20 per cent threshold and fails to recover completely by maturity, the capital will be reduced on a one-for-one basis.

Minimum investment is £5,000, with no upper limit. Investments before October 21 will get a bonus of 0.35 per cent. Commission is 3.5 per cent.

Head of investment pro-positions Neil Davies says: “The Prosper income bond is a great vehicle for customers who want the security of having a guaranteed high income over a fixed period, especially at a time when interest rates are at a 30-year low.”

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