Scottish Life International has introduced the fifth series of its stockmarket linked income and growth bonus bond.
This offshore bond has a three year term and gives investors the choice between two income options and a growth option. They can select an annual income of 11.2 per cent gross, a quarterly income of 2.7 per cent gross or a return of 135.6 per cent gross after three years under the growth option.
The bond is linked to three stockmarket indices the FTSE 100, the S&P 500 and the EuroStoxx 50. Investors' capital will be returned in full unless one or more of the indices falls by more than 30 per cent and does not recover by the end of the term. Where there is no recovery at the end of the term, investor's capital is reduced by one per cent for each one per cent fall in the index.
The present period of stockmarket volatility could make this type of capital protected investment attractive to cautious investors who are looking for offshore tax incentives. The use of three indices is good in that investors are not relying on a single index. But the flip side is that poor performance in one index might drag the capital return down if the other two indices do not fall below 30 per cent.
The EuroStoxx 50 index rose from 3331.70 points on April 9, 1998 to 4024.15 points on April 9, 2001.