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Structured Solutions Group puts together early bonus

Structured Solutions Group has brought out the early bonus plan III a guaranteed equity bond linked to the performance of the FTSE 100 index for a term of six years.

The bond provides a full capital return regardless of the performance of the index and also has an early maturity feature which can be triggered from year two. If the index has risen by at least 7 per cent at the end of year two, 10.5 per cent at the end of year three, 14 per cent at the end of year four or 17.5 per cent at the end of year five, investors will receive 14 per cent, 21 per cent, 21 per cent, 28 per cent or 35 per cent growth respectively.

Otherwise, the product will run full term, paying out 100 per cent of the growth in the index after six years.
If the bond runs full term, the returns will be calculated by comparing the closing level of the index with an average produced over the final 13 months of the term.

Premier Fund Managers is offering a similar six-year FTSE 100-linked product with an early maturity feature called the UK growth plan. However, this product only provides soft protection so investors will get their original capital returned in full only if the index does not fall by more than 50 per cent without returning to its initial value. If this safety net fails, investors will lose 1 per cent of their capital for every 1 per cent fall in the index.

The Premier product has an early maturity feature from year three, so there are less trigger points than the Structured Solutions Group product. If the index has risen by at least 5 per cent between years three and five, investors will receive 22.5 per cent, 30 per cent, 37.5 per cent and 45 per cent growth over years three, four, five and six respectively.

Although the Premier product has higher overall growth potential compared with the Structured Solutions Group product, this is matched by the risk to capital. Also, if the products run full term, the returns are different. While the Premier product offers a fixed return of 45 per cent, the Structured Solutions Group product is based on index performance, which could be higher or lower than Premiers return.


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