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Zurich launches fourth guaranteed account

Zurich has unveiled the fourth issue of the Zurich guaranteed account, a capital-protected bond that could mature earlier than its full term of five years and six months.

The bond is linked to the FTSE 100 index and the original capital will be returned to investors whatever happens to the index. It will mature in year three, providing 30 per cent growth plus the original capital, if the index has risen by at least 30 per cent. Otherwise, it will run for the full five years and six months and investors will get 100 per cent growth plus their original capital.

Providers such as Premier Fund Managers have been bringing out products with early release trigger since the start of this year. With these products, investors take a gamble on getting 100 per cent growth at the end of the term, while the early release triggers reduce the chances of this happening.

Premier Fund Managers&#39 Premier growth plan is based on a similar idea but is a more sophisticated variation, as there are more early release trigger points and less capital protection. If the index has remained the same or risen by the first anniversary, the product matures with a 107 per cent return. Payment rates are 114 per cent in year two, 121 per cent in year three and so on.

Investors with Zurich will get 9 per cent more in year three than Premier investors if the index rises by at least 30 per cent and their capital is never at risk. In comparison, Premier investors will lose 1 per cent of their capital for every 1 per cent fall in the index if it falls by at least 50 per cent. However some investors may like the early release points and fixed returns Premier offers each year, which are not dependent on the index reaching a set target.

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