The bond aims to generate income and growth over a six-year term by splitting the original capital equally into two elements. To provide annual income, some of the capital will go into a high interest account which tracks at 0.6 per cent above the three-month dollar Libor rate to give a current rate of 4.32 per cent gross.
Although no partial withdrawals are allowed during the term, investors can withdraw the whole of the income element of the bond while leaving the growth element invested.
The growth element is linked equally to a basket of three asset classes – the FTSE 100 Index, Nymex Crude Oil Futures and the dollar/sterling exchange rate, with the dollar to strengthen. At the end of the term investors will receive 85 per cent of the growth in the basket. To calculate the returns, the value of each asset class will be taken at the start of the term and compared against an average produced over the final 13 months of the term.
The product provides a full capital returns regardless of the performance of the underlying investments, with Abbey International providing the underlying guarantee.
Providing income and growth within a single product which also offers exposure to different asset classes may appeal to wealthy offshore investors who are not getting attractive rates of interest on their dollar-denominated savings account. The full capital protection on offer may also give investors peace of mind.
However, this likely to be seen as niche product by IFAs as the minimum investment is high at $100,000.