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Nvesta zooms off

Nvesta has established the accelerator growth plan 3, a six-year guaranteed equity bond linked to the performance of the Dow Jones Eurostoxx 50 index.

Although the product has a six-year term, it has an early maturity feature which can be triggered each year, depending on the performance of the index.

If the index rises by at least 5 per cent in year one the bond will mature paying out 10 per cent growth. A rise in the index of at least 10 per cent in year two will lead to 20 per cent growth, a rise of at least 15 per cent in year three will result in 30 per cent growth, a rise of at least 20 per cent in year four will lead to a 40 per cent return and in year five, if the index rises by at least 25 per cent in year five investors will receive 50 per cent growth.

Finally, if the product runs full term, investors will receive 100 per cent of the growth in the index.
Investors will also get a full capital return provided the index does not fall by more than 40 per cent without recovering to at least its initial value by the end o the term. If this safety net fails, investors capital will be reduce by 1 per cent for every 1 per cent fall in the index.

The choice of index marks a departure from the usual array of FTSE 100-linked products and appears to be catering for the more sophisticated end of the market which does not rely on the FTSE 100 comfort factor.

A survey from the Structured Retail Products website found that the level of capital protection is the most important factor for IFAs when advising clients. This product sits at the riskier end of the structured products market because it offers soft protection rather than full capital protection, so it would not suit everyone looking for a structured product.

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