Group to roll out its recovery plan and higher income and growth bond early next year
NDF is to launch two equity-linked investment bonds early in the new year.
The first, the NDF Recovery Plan, will offer investors 100% of the rise in the FTSE 100 index over a five-year investment term, with full return of capital, providing the index does not fall by more than 50% during the life of the bond.
Should the index level fall by more than 50%, investors will lose 1% of their capital for every 1% the FTSE has fallen below its starting level at the end of the product's life. If the FTSE falls by less than 50% from its start level during the life of the bond, capital is protected.
If the FTSE recovers beyond its initial starting level, investors will still benefit from the upside.
The bond is both Isable and Pepable and carries a minimum investment of £7,000 within an Isa package and £10,000 outside of it. Intermediaries will be eligible to receive upfront commission of 3.5%.
The bond's offer period opens on 7 January 2002 and runs until 28 February 2002.
NDF managing director Anthony Stack said the product has been designed to offer investors who have been affected by recent stock market volatility the potential to recoup losses and benefit from further gains while reducing the risk to their capital.
The group set up the product before the most recent set of interest rate cuts.
'I don't think if we were trying to put this product together now we would be able to get such favourable terms from the companies that provide the underlying derivatives,' Stack added.
The second bond, the NDF Higher Income & Growth plan, offers investors a choice between an income and a growth option. The income option guarantees investors a 9% annual income for the life of the product plus a minimum return of 55% of capital. This will give a total return equivalent to 100% of capital invested.
The product is linked to a basket containing the 10 largest FTSE 100 stocks. If the stocks rise in value, investors will benefit from the upside. If the combined share price of the 10 stocks falls by more than 20% at the end of the product's five-year term, investors will lose 0.5% of their capital for every 1% of the fall in the basket's value.
The amount of downside exposure is limited, however, to a maximum of 45% of invested capital.
The growth option offers investors the return of 100% of capital and up to 50% of the upside on the basket of FTSE stocks.
Intermediary commission is 3% and the bond is both Isable and Pepable, with the same minimum investment amounts and offer period as the Recovery offering.
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