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Widows and Rock take higher ground

Scottish Widows is offering combination products which consist of a guaranteed equity bond and a high interest account.

The Scottish Widows guaranteed investment combination is a six-year guaranteed investment bond linked to the FTSE 100 index and a high-interest account called the term deposit account which offers an interest rate of 7 per cent gross over 12 months.

Northern Rock already offers a similar product. Issue 12 of Northern Rock&#39s 50:50 product consists of a five-year guaranteed equity bond also linked to the FTSE 100, with a high-interest account which offers 7 per cent gross interest for two years.

Both products would suit cautious investors as both return capital in full at the end of the term, whatever happens to the FTSE 100 index.

Neither product allows investors to choose the investment split. The Northern Rock product splits capital equally between the two elements over five years while the Widows product invests 70 per cent of capital into the guaranteed equity bond element for one extra year. It may be more suitable to equity-minded investors with a longer-term view.

The calculation of returns on the guaranteed equity bond elements also differ. Widows measures the performance of the FTSE 100 every six months during the term, capping any rise or fall at 8 per cent.

The Northern Rock product compares the average level of the FTSE 100 during the final year with its closing level at the start of the term. Unlike the Widows product, it protects investors from stockmarket slides during the middle of the term but will not capture the highs during this period.

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