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The bull and bear necessities from Arc

Arc Capital & income has introduced the Bull & Bear Enhanced Investment Plan, a guaranteed equity bond that provides growth if the FTSE 100 index rises or falls.

The plan has a six-year term and provides geared returns of 1.25 per cent for each 1 per cent rise in the index, providing the growth in the index does not exceed 100 per cent. Alternatively, investors will get 1.25 per cent for every 1 per cent fall in the index, providing the index does not fall by more than 50 per cent.

Otherwise, if the index falls by more than 50 per cent from its initial level or rises by more than 100 per cent at any time during the investment period, investors will get back only their original investment.

To calculate he returns, the closing level of the FTSE 100 index is taken on March 28, 2008 and compared with the closing level on March 28, 2014. The index is also monitored throughout the term.

According to the Structured Retail Products adviser website, this product is unique in that no other products offer a bull and bear structure. The Arc product would suit cautious investors for whom full capital protection is a priority, but who also want a geared return above this whether the stockmarket rises or falls over the next six years.

However, is possible to get higher geared returns over six years when the FTSE 100 rises if investors are willing to accept more risk. Keydata’s dynamic growth plan plus 4 offers a 10 per cent return for every 1 per cent rise in the index, but investors get no returns if the index falls and there is a risk to capital if the FTSE 100 falls by more than 50 per cent.

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