The capital growth plan issue A18 from Woolwich Plan Managers is a capital-protected bond that is linked to the FTSE 100 index for a five-year term.
The product provides a 100 per cent capital return regardless of the performance eof the FTSE 100 plus 100 per cent of the growth in the index.
There is an early maturity option which can be selected at the outset. If this option is selected, the bond will mature after two years and six months if the index has risen by at least 25 per cent by that point and investors will receive 25 per cent of their original capital.
To calculate the returns the closing level of the index is recorded on October 25, 2004 and compared with an average taken over the last 12 months of the term.
Woolwich Plan Managers is currently the only product to offer an early maturity trigger on a five-year term and this could make it attractive to investors who like the possibility of an early payout but who feel a six-year term is too long in the event of the early maturity not being triggered.
Premier is currently offering a six-year FTSE-100-linked early maturity product but this offers only soft protection against index falls rather than full capital protection.
Nvesta's secure tracker plan 5 offers full capital protection and has an early maturity feature after three years - halfway through it's six-year term. Investors who opt for the early maturity version of the plan will get a 130 per cent return f the index rises by at least 30 per cent in year three. If this does not happen investors get 107.5 per cent of the growth in the index - a slightly geared return that may make some investors feel that the extra year of investment is worth it.