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Skipton launches double asset bond

Skipton Building Society has established the double asset bond 2, a product which combines a FTSE-100 linked guaranteed equity bond with a one-year fixed-rate savings account.

Investors with a minimum investment of 3,000 will have a third of their capital place in the fixed-rate savings account which pays interest at 7 per cent gross. The remainder will be invested in the guaranteed equity bond element which provides 100 per cent growth in the index at the end of the term.

To calculate the returns, the closing level of the FTSE 100 index will be measured on September 29 and compared with an average produced over the final year of the term, which is five years and six months.
According to the products database on the Structured Retail Products website, there are four providers offering these types of combined products, although the Skipton products investment term is unique.

Britannia Building Society, Newcastle Building Society and Woolwich Plan Managers are offering five year products, while Bristol & West has a six-year product.

Taking a six-year view, investors could opt for Bristol & Wests Income and Growth GEB Issue Six . This enables investors to place up to half their capital in a tracker savings account or a fixed-rate account but interest is payable monthly so it does not provide a good comparison.

However, all the five-year products are split equally between the two elements, so they have less exposure to the growth elements than the Skipton product.

All the five-year products have higher interest rates on the income element than the Skipton product, despite having a shorter term. Woolwich Plan Managers pays 8.75 per cent gross, Britannia Building Society pays 7.75 per cent gross and Newcastle Building Society pays 7.75 per cent gross over one year.

However, unlike the Skipton product, none of the five-year products offer a 100 per cent participation rate the highest is Newcastle Building Society at 70 per cent.


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