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Scottish Mutual takes the dual index highway for income

The Scottish Mutual income bond is taking a dual-index road to the


Created as a guaranteed income bond for investors who are looking

for a product that gives them a choice between an income and

growth, the bond will be linked to a basket of 30 stocks chosen from

two indices, the FTSE 100 and S&P 500.

The 30 stocks will be divided equally between the two and will be

chosen from a range of sectors, including consumer goods,

telecoms and the manufacturing industry.

Investors must have a minimum of £5,000 available for investment.

They can then choose one of three payment options, ranging from

0.67 per cent income monthly, 8.25 per cent annually, and the growth

option of 26 per cent at the end of the three-year and two month


The original capital is guaranteed to be returned as long as the

stocks do not fall by more than 30 per cent during the third year. If a

stock does fall by more than 30 per cent then the original capital will

be reduced by 1 per cent for every 1 per cent further fall in value in that

stock. There is no minimum capital return.

Most guaranteed income products, like the Scottish Widows

guaranteed income bond, measure the level of an index or a stock

over the term of the product, with the original capital being reduced if

there is a fall in value during the entire term. The Scottish Mutual

product is innovative as it only measures any fall that takes place in

the last year of the plan. However, even then it is possible for a stock

to fall by 30 per cent in value over one year. By contrast the Chase de

Vere guaranteed income bond offers the guarantee that the original

capital will be returned in spite of any falls in the FTSE 100.

The S&P 500 index went from 1,081.24 points on August

21, 1998 to 1,162.09 points on August 23, 2001, while the FTSE 100

index went from 5,465.93 points on August 21, 2001 to 5,396.5 points

on August 24, 2001.


Portman gets the low down

Portman Building Society has introduced a two-year fixed rate mortgage which is fixed at 5.19 per cent until October 1, 2003.The mortgage is available to all borrowers for loans of up to 95 per cent of valuation and has an arrangement fee of £300. Borrowers who pay the mortgage off during the fixed rate period […]

Four UK funds on way in F&IS rebrand as Isis

Friends Ivory & Sime is to rebrand under the name Isis for its relaunch into the retail market next month. The firm will launch three funds – Aim growth, UK smaller markets and UK dynamic – as part of a new Oeic, which will open on September 1. A fourth fund – UK progressive growth […]

BFS moves into property

BFS INVESTMENTS BFS PROPERTY MANAGED SECURITIES Type: Split-capital investment trust. Aim: Income and growth by investing in freehold and long leasehold property and split-capital investment trusts. Minimum investment: Subject to negotiation with stockbroker..Place of registration: Guernsey. Investment split: Freehold and long leasehold property 65 per cent, split-capital investment trusts 35 per cent. Isa link: Yes. […]

&#39IFAs must unite before N3 to save loan code&#39

The mortgage code could wither and die if brokers fail to secure co-ownership thr-ough a credible trade association before N3, the Intermediary Mortgage Lenders&#39 Association is warning. Imla chairman John Heron says the mortgage code could be left hanging by a thread unless brokers club together and ensure its future before statutory regulation comes into […]

Tax avoidance (the fight goes on)

In recent times, we have witnessed high-profile celebrities and sports stars make the headlines for potential tax liabilities on ‘failed’ tax avoidance schemes. We are now used to reading about these individuals, but what about those who advise on such schemes? Read more


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