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Nvesta’s home on the range

Nvesta

Rangemaster Income Plan

Type: Guaranteed equity bond

Aim: Income linked to the performance of the FTSE 100 index

Minimum-maximum investment: 3,000-no maximum

Term: Three years

Return: 10% income a year provided index does not rise or fall by more than 10% a year

Guarantee: Original capital returned in full at end of term regardless of performance of index

Closing date: February 8, 2005

Commission: Initial 3%

Tel: 020 7454 0704

The rangemaster income plan is a guaranteed equity bond paying 10 per cent annual income for three years provided the FTSE 100 index does not rise or fall by more than 10 per cent a year. If the index performs outside this range, no income will be payable but the original capital will be returned.

Baronworth director Colin Jackson thinks Nvesta may find it difficult to achieve an acceptable level of investment in this product due to the adverse publicity it is receiving from the Eurolife secured bond Isa.

However, he regards this product as unique and thinks the capital guarantee is beneficial in an uncertain and nervous market. Jackson feels the potential level of income is very attractive but adds: “There is no certainty as to whether any income will actually be paid, as this is dependent upon the performance of the FTSE 100.”

When asked what he does not like about the product,
Jackson says: “Despite the capital guarantee, many investors are very wary of anything that gives a return linked to an index.” He also complains about the lack of an Isa option.

Concluding with an overall review of the product literature, Jackson says: “This is relatively clear, although there is no specific reference to the fact that the income will be treated as income for tax purposes, as opposed to a capital gain.”

BROKER RATINGS:

Suitability to market: Poor
Flexibility: Average
Adviser Remuneration: Good

Overall 4/10

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