Royal Bank of Scotland International has unveiled a guaranteed growth bond that is available in either sterling or dollars.
The sterling-denominated version of the stepped growth bond is linked to the performance of the FTSE 100 index during a three-year term and the dollar-denominated version tracks the performance of the S&P 500 index.
UK expatriates and people from abroad who live in the UK have the potential to receive growth of up to 25 per cent with the sterling-denominated version of the bond and 20 per cent if they choose the dollar-denominated version.
The return of the original capital is guaranteed whatever the currency denomination and however the chosen index performs, but this does not extend to any additional growth.
The final returns are different depending on the currency denomination of the bond. The sterling denominated bond offers investors their original capital only if the FTSE 100 grows by less than 5 per cent, but the remaining four tiers allow returns ranging from 5 per cent to 25 per cent, depending on how much the index is grown.
The dollar-denominated bond offers investors their original capital only where growth in the S&P 500 is less than 5 per cent. Growth in the index of 5 per cent and above is again tiered so investors get between 4.25 per cent and 20 per cent depending on how much the index is grown.
Falling interest rates and volatile stockmarkets have created a demand for products that safeguard investors' original capital. However, the full capital protection offered by this bond is only possible because the returns are capped.