Skipton Guernsey has introduced a five-year guaranteed growth bond aimed at offshore investors.
The bond is linked to the FTSE 100 index for five years and returns the original investment plus at least 26 per cent growth, even if the FTSE 100 index falls during the term. The maximum growth investors get is 50 per cent.
It is identical to Skipton's onshore five-year guaranteed growth bond except for one feature. Investments made before September 14, 2001 will accrue interest at 5.30 per cent gross a year before it is invested in the bond on October 2, 2001. This is a higher interest rate than offered under the onshore version, but the final return is calculated the same way for both bonds.
The starting level of the FTSE 100 index is taken on October 2 each year during the term. Investors get an 8 per cent return for each year the index grows. To get the maximum return the index must rise every year and if this happens a 10 per cent bonus is added to bring the growth up to 50 per cent.
Where the index increases between one and three times during the term investors will only get 26 per cent growth plus their original capital. They will get growth of 32 per cent if the index rises four times.
This bond may suit investors who are retiring abroad and those who invest offshore because of the tax advantages. Some investors may be satisfied with a capped level of growth if it means they will come away with their original investment intact and a minimum level of growth. However, others might prefer higher growth potential without a capital guarantee.