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Product matters

HSBC Asset Management&#39s limited offer capital and income plan offers higher-income potential with 100 per cent capital protection at the sixth anniversary.

It is tagged to four indices with equal weightings – the FTSE 100, S&P 500, Nikkei 225 and Eurostoxx 50 – giving global exposure albeit in structured financial instruments for income only.

Income is fixed in year one at 6.8 per cent with variable income thereafter. Income is annually in arrears and from year two is directly linked to average movement in the indices in relation to original strike prices on April 22.

Each index has losses collared to a maximum of 6.8 per cent and capped on its upside to 6.8 per cent. After year one, the minimum yearly income is 0 per cent and maximum is 6.8 per cent.

It is available for new maxi and mini Isas, Isa and Pep transfers and direct share plan holdings. Capital protection is 100 per cent at the sixth anniversary.

Commission is 4 per cent. With capital protection and no explicit charges and capital protection, the plan will attract many. It is targeted at higher-income seekers, with similar risk to being on deposit. But with interest rates on the rise and that variable income with a cap, perhaps deposit is a better bet.

For those like me who believe real equity exposure without protection but with dividend participation – which trackers do not give – and capital growth prospects will deliver returns over 6.8 per cent a year, maybe this is not the maxi Isa this year. A good bet though for mini Isas who have used their cash allowance and want more of the same.

Ashley Clark is director at Need An Adviser.com

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