HSBC Asset Management will this week launch two guaranteed Dublin Isas back-to-back which pay steppe...
HSBC Asset Management will this week launch two guaranteed Dublin Isas back-to-back which pay stepped income rising to 10% over five years.
The Fixed Income Isa pays 6% income in the first year, 6.5% in the second, 7% in the third year, 7.5% in the fourth and finally 10% in the fifth year.
There is also a roll-up option of 41% and a quarterly income option which adjusts to reflect each step up in income. Commission for IFAs is 3% on the Isa version and either 3% initial or 1% initial and 0.5% renewal on Pep transfer. Either general or single company Peps are eligible for transfer.
The offer period lasts until 28 April comprising two offer periods and allowing back-to-back Isa investments of this year's and next year's allowance, a total of £12,000.
The income and growth options on the product are guaranteed, but return of original capital is not. That depends on the performance of the FTSE 100.
If the index has risen from its starting level on maturity of the Isa, the investor will receive either the growth or income options and full return of original capital invested.
If however the index has fallen from its starting level on maturity, investors still receive all the income or growth returns, but will suffer capital erosion at a rate of 1% for every 1% lost by the index.
For example, if the index were to fall by 5%, investors would also lose 5%, thus receiving all their returns but only 95% of capital invested.
The product has slightly less attractive terms than the last Isa, which paid 12% in the final year.
Mark Dickson, director of product development at HSBC Asset Management, said: "Because of market conditions, the assets backing this product are slightly more expensive now. Also, the feedback from IFAs was that the 12% rate looked too high and might cause problems for investors looking for a similar income in year six. This way there is smoother growth.The product is structured in this way to ensure that investors' returns rise in line with any forthcoming interest rate rises."
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