Both investment options provide a full capital return unless the index falls by more than 40 per cent during the term and does not recover by the end. If it does not recover, investors will lose 1 per cent of their original capital for every 1 per cent fall in the index.
Investors who opt for the three-year term will receive 400 per cent of the rise in the index, capped at 24 per cent growth. This means that if the index rises by at least 6 per cent, the maximum growth will be paid. This option is not available for Isas and Pep/Isa transfers.
Investors who opt for the six-year term can invest directly, through an Isa or Pep/Isa transfer. They will receive 400 per cent of the rise in the index, capped at 64 per cent growth. This means that if the index rises by at least 16 per cent, the maximum growth will be paid.
In an environment dominated by structured products with full capital protection with limited scope for geared returns, this offers something for investors who are willing to take a risk with their capital to achieve a higher rate of return.
However, the attractiveness of a 400 per cent return will depend on by how much the index rises. A rise of up to 6 per cent over three years or up to 16 per cent over six years will be attractive as the maximum growth will be paid. However, any growth above these limits will not be passed on because of the cap on growth.
Some investors may feel the risk of capital erosion is not worth taking should the index rise above the cap on growth.