Premier Fund Managers has brought out a second issue of the extra income and growth plan, a guaranteed equity bond that is linked to the Dow Jones Eurostoxx 50 index for five years.
This product provides investors with a choice of annual income at 6.25 per cent, monthly income of 0.5 per cent or growth of 34 per cent at the end of the term. To calculate the final returns, the closing level of the index is recorded on February 21, 2003 and is compared with the closing level on February 21, 2008.
Investors will get their original capital back if the index never falls by more than 30 per cent during the investment term. Where it does, a full capital return will still occur provided the final index level is at least as high as the starting level. However, if it falls by more than 30 per cent without recovering, investors will lose 1 per cent of their capital for every 1 per cent fall in the index.
This product could be of interest to investors who are still feeling cautious after recent stockmarket volatility and who want some degree of capital protection plus a defined level of income or growth.
Keydata's extra income plan is linked to the same index and also returns investors' capital in full unless the Eurostoxx 50 falls by more than 30 per cent without recovering by the end of the five-year term. Investors will also lose capital at the same rate as the Premier product where the conditions are not met.
However, the Keydata product offers higher returns than the Premier product, as investors can choose an annual income of 7 per cent, quarterly income of 1.7 per cent or growth of 38 per cent.