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Product matters

The geared upside phenomenon keeps escalating and this time, Nvesta, formally known as Eurolife, has launched two six-year tracker plans. The first, the quad tracker plan, offers four times the upside of the FTSE 100 subject to a maximum of 80 per cent while the second, the super tracker 30, is offering a return of 100 per cent of any rise in the FTSE with no maximum but a minimum return of 30 per cent.

The quad tracker is a simple geared upside product with some downside protection. As long as the final level of the FTSE is not, or never has been, 50 per cent below the strike value, then, at maturity, the original capital will be returned in full. If the barrier is broken, capital is reduced on a 1:1 basis. On the upside, the plan offers four times any growth in the FTSE up to a maximum of 80 per cent.

The super tracker 30 plan is slightly different. Again, there is 50 per cent soft protection with a 1:1 downside but the plan will also pay a minimum return of 130 per cent, provided that barrier is not broken. If the index rises above 30 per cent, the plan has the benefit of full exposure to the FTSE with no cap but the minimum still exists if the index were to drop back below 30 per cent and not breach the 50 per cent protection barrier.

The plans are not unique yet they do offer a good level of reward for the associated risk. In general, one should not necessarily shun these geared upside plans because of their ubiquity but treading carefully would be advisable. However, that said, this offering appears to be one of the better combined growth products I have seen for a while.

Darius McDermott is managing director of Chelsea Financial Services

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