nvesta, the new brand name for Eurolife Fund Managers, has introduced a five-year guaranteed equity bond that is also available as an Isa.
The capital secure FTSE plan is linked to the FTSE 100 index and will return investors original capital at the end of the term, whatever the movement of the index.
It offers investors all the growth in the FTSE 100 index over the term up to a maximum of 70 per cent. To calculate the returns, the closing level of the FTSE 100 index is taken on September 26, 2002 and compared with the average daily closing levels of the index during the final six months of the term.
The bond shares is virtually identical to the second tranche of the National Savings and Investments guaranteed equity bond. However, the National Savings & Investments bond is not available as an Isa. Also, the bonds are based on different types of starting level.
The National Savings and Investments bond produces a start date from the average closing levels of the FTSE 100 over a five day period. The nvesta bond does not use averaging and takes its start date from the closing level of the FTSE 100 index on a single day.
Investors would benefit from a low start date as this provides more scope for growth. A single day start date could be useful where the index is at a low point, but it would be not so useful if the index continued falling over the next few days. Five-day averaging could work to the investors advantage in this case, but any slight increase during those five days would increase the starting level.