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Optimal choice for Britannia International

Britannia International has established the optimum growth bond 11, a FTSE 100-linked guaranteed equity bond that could mature earlier than its six-year term.

Investors in this product will receive a full capital return regardless of the performance of the index plus 33 per cent of the original investment if the index has risen by at least 33 per cent in year three. Otherwise the product will run full term, paying out 125 per cent of the rise in the index after six years.

To calculate the returns the closing level of the index is recorded at the start of the term and compared with its value at the third anniversary. If growth is lower than 33 per cent the starting level will be compared with the daily average produced over the final year of the term.

According to the products database on the Structured Retail Products database, there are currently no offshore products that provide an exact comparison. Bank of Ireland Isle of Man’s income & growth guaranteed equity bond issue 3 is a FTSE 100 linked product that has a six-year term, but it does not have an early maturity feature. It also divides the original capital between a guaranteed equity bond element for growth and a high-interest account element for income.

As a pure growth product Britannia International’s plan has a higher participation rate than Bank of Ireland’s product, which provides 70 per cent of the growth in the index. However, Bank of Ireland’s product caters for investors seeking monthly income as well as growth, so the overall returns are boosted by its fixed rate interest of 5.1 per cent a month or tracker option of 0.5 per cent above the Bank of England base rate.

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