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Standard banks on index trio

Standard Bank offshore has created equity growth deposit 5, a guaranteed equity bond that is linked to an equally weighted basket of three stockmarket indices over a four-year term.

The product is available in two currencies and is linked to the FTSE 100, S&P 500 and Nikkei 225 indices. Investors receive a full capital return regardless of the index performance. In addition, sterling investors get 100 per cent of the average growth across the indices while dollar investors get 75 per cent of this growth.

To calculate the returns, the closing level of the index measured at the start of the term and compared with the quarterly average over the last 12 months of the term.

This product is currently unique as the majority of offshore guaranteed equity bonds are linked to the performance of just the FTSE 100 index. The closest to Standard Bank Offshores product is Manor Parks guaranteed global growth March 2005. However, this has a term of five years, is linked to the FTSE 100, S&P 500 and Dow Jones Eurostoxx 50 index, and allows investors to choose the capital protection/return trade off so it not directly comparable.

One potential problem with both the Standard Bank Offshore and Manor Park products is that returns are averaged across more than one index, which could dilute growth potential.

However, a positive aspect of this is that geographical diversity ensures that investors do not put their eggs into one basket.


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