View more on these topics

Woolwich plan moves up a gear

Woolwich Plan Managers has brought out the accelerated growth plan, a capital-protected bond linked to the FTSE 100 index for a six-year term.

Growth at 350 per cent of the rise in the index is offered but this is capped at 63 per cent. This means the index must grow by at least 18 per cent during the term to get the full return, but if there is a larger increase investors will not fully benefit from the geared return because of the cap on growth.

To calculate the returns, the closing level of the FTSE 100 index is recorded on September 17, 2004 and compared with the closing level of the index on September 17, 2010.

The bond offers soft protection, which means investors will get their original capital back in full only if the index does not fall by more than 50 per cent during the term. Even if it does, but recovers to at least its starting value, investors will get a full capital return. However, if the index fails to recover investors will lose 1 per cent of their capital for every 1 pr cent fall in the index.

This product fits into the market at the higher end of the risk spectrum, as the capital protection is only conditional. However unlikely it may be that all the original capital is wiped out, it is still a risk that could put off some investors.

Unlike many lower-risk products, this one does not use averaging so if the stockmarket peaks during the term and then dips at the end, investors would not benefit from the high points and the returns would be lower. However, this also works in reverse, so investors will fully benefit from any peak that coincides with the final day of the term.

Recommended

Critical barrage for Bupa service levels

Bupa&#39s underwriters told the health insurer it should close to new critical-illness business until it cleared up its service problems, according to Hoiland Financial Services adviser Gary Festa. After making a complaint to Bupa on what he describes as “disgraceful” administration, Festa says he was told by Bupa compliance officer Andrew Barnes that underwriters have […]

GE Life goes through a phase

GE LIFE PHASED DRAWDOWN PLAN Type: Income drawdown plan Minimum investment: Lump sum £150,000 Investment choice: Choice of 41 unit-linked funds from GE Life and external managers, discretionary pension portfolio via Cazenove, Morgan Stanley Quilter, Rathbones and Tilney, simplified Sipp and Sipp options Allocation rate: 100% Charges: Unit linked funds &#45annual 0.36%-1.65% depending on fund, […]

FSA checking on indirect benefits

The FSA has just concluded a review of the indirect benefits paid by product providers to intermediaries which could uncover anomalies. The review, which has been conducted over a four-month period, required product providers to share with the FSA all the indirect benefits they paid out over this period. It also looked at what intermediaries […]

Kensington announces results

The Kensington Group has reported a strong performance in the first half of 2004, with new business volumes of more than £1bn and the mortgage portfolio now standing at £3.5bn. Kensington are increasing the interim dividend in line with a progressive dividend policy that increases returns to shareholders as the business grows. Chief executive office […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment