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Safety nets for 40% downside

Structured product provider Nvesta is launching the latest two in its series of index tracker plans, offering downside protection if the FTSE 100 falls by up to 40 per cent.

Quad Tracker Plan 2 is a six-year plan which offers four times the growth in the index up to a maximum of 80 per cent. As long as the index does not fall by more than 40 per cent during the investment period, the original capital is guaranteed.

If the barrier is breached, the return is based on the average closing level of the index over the last five trading days preceding maturity and capital is reduced on a one for one basis.

The Super Tracker 35 Plan is also a six-year plan paying 100 per cent of any increase in the FTSE 100 with a minimum return of capital plus 35 per cent provided the safety barrier is not breached.

If any fall is less than 40 per cent, investors are guaranteed a 35 per cent return, any more of a decrease and the loss is calculated on the same basis as the first plan.

The initial index level for both plans is at close of the market on July 14. The closing date for investment is June 30 or June 23 for Isa and Pep transfers.

Minimum investment is £3,000 and maximum is £2m.

Finance director Simon Bottomley says: “With 40 per cent downside protection, investors can only begin to lose some of their capital if the FTSE 100 should fall from existing levels to around 2,400. The last time that this occurred was March 4, 1991 when the index was 2,382.9.”

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