Legal & General is to launch a five-year bond called the Protected Portfolio later this month invest...
Legal & General is to launch a five-year bond called the Protected Portfolio later this month investing in 30 of the largest 200 UK companies.
It offers a 100% capital guarantee to investors, providing they hold the product for its full five-year lifetime.
The performance of each of the 30 stocks will be calculated individually at the end of the contract. Investors will not get more than a 100% appreciation in value of any one stock. Those wishing to sell before term will get the underlying value of the fund from the market maker JP Morgan. At the end of the five-year period, the sum of the return of the 30 stocks will be divided by 30 to calculate the overall return. The stocks were selected by a team of Legal & General managers and were chosen on the basis of those which have long-term growth potential.
The offer period on the product runs from 22 October until 30 November. There is 3% commission offered to intermediaries. There are no specific initial or ongoing charges but the total cost to investors will not be more than 0.8% per annum taken from the value of their investment. The companies in which the bond will invest are spread through all the sectors and the stocks include British Telecom, and British Airways.
The product was developed to offer investors a relatively secure vehicle at a time when there is great uncertainty about the market, according to Michael Hayden, retail investments director.
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