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RBSI bond absorbs fund of funds trend

Royal Bank of Scotland International has absorbed the trend for funds of funds with its first guaranteed equity bond to be linked to a basket of funds.

The five star bond is linked to five offshore funds — Fidelity European growth, Julius Baer Japan leading stock, Credit Suisse equity fund (Lux) USA, Merrill Lynch Mercury offshore sterling trust UK and JPMorgan Feming USD global bond — over a five-year term.

Royal Bank of Scotland International offers around three guaranteed equity bonds each year, but until now these have been linked to a stockmarkt index, a basket of indices or a basket of shares. The five star bond diversifies across sector and fund management groups like a fund of fund, with the added bonus of capital protection.

Investors get their original capital back whatever happens, but any growth depends upon the performance of the funds. To calculate the final return, an average is taken of the funds&#39 monthly values and this is compared with an average taken over the last 12 months of the term.

The bond could provide a temporary haven for stockmarket investors who may have suffered during the recent downturn. It could also appeal to building society investors who are looking for a stepping stone into direct stockmarket investments. However, the price paid for capital protection is 25 per cent of the growth in the funds, which could put some investors off.

According to Standard & Poor&#39s, all five funds are ranked first quartile based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to April 22, 2002.


Saving time

Although the debate has cooled, the recent Budget did signal the Government&#39s continued commitment to asset-based welfare policies.The child trust fund – or baby bond – remains in the pipeline and should be implemented before the next election. The savings gateway, a matched sav-ings policy for low-income adults, is being piloted from August.One of the […]

Northern Rock – Fifty:fifty Issue 8

Thursday, May 9, 2002GUARANTEED EQUITY BONDType: Guaranteed equity bondAim: Growth linked to the FTSE 100 indexMinimum investment: Lump sum £2,500Term: Five yearsGuarantee: Capital returned in full at end of five year termReturn: Up to 75% of growth at end of termClosing date: June 12, 2002HIGH INTEREST ACCOUNTType: High interest accountMinimum-maximum investment: £2,500-£2mInterest rate: 10% gross […]

IFAs in the clear on endowments

IFAs have been publicly exonerated from having any involvement in mortgage endowment misselling by the chief financial ombudsman.Banks and building societies are to blame for mortgage endowment misselling with IFAs in the clear, Walter Merricks said at last week&#39s LIA Annual Conference in London.He said the vast majority of endowment problems have resulted from consumers […]

52% of brokers call for buy-to-let regulation

The majority of mortgage brokers want the buy-to-let market regulated, according to new research from Sun Bank.The research shows that 52 per cent of brokers think the Treasury has made a mistake by excluding buy to let from the FSA&#39s remit for mortgage regulation.The exclusive survey for Money Marketing by the specialist lender of 168 […]

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Fit for Work: guidance for employers published

On Friday, the Department for Work and Pensions published its guidance for employers on using the new Fit for Work (FfW) service to help ill employees return to the workplace. It also includes more details on the tax exemption for medical interventions that commenced on 1 January 2015.


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