Pinnacle Insurance, a subsidiary of Paribas, plans to launch a guaranteed stock market bond with a h...
Pinnacle Insurance, a subsidiary of Paribas, plans to launch a guaranteed stock market bond with a headline income above 8% in late September.
The life of the bond will be four years and it will link to a UK stock market index. Commission for IFAs will be 3%.
Clive Moore, general manager, investment sales at Pinnacle, said: 'The details are not finalised but we will be sticking to a four-year term and the UK and not using any European indices. It will be similar in structure to the last bond we did it won't require growth in the index to provide returns. The income will not be close to 9% but it will definitely be more than 8%.'
Pinnacle's last bond was a reverse convertible structure. In such a product the income or growth returns are guaranteed but the original capital is not.
Full return on capital depends on the performance on the index to which the product is attached. If the index has risen or stayed at the same level as its starting point by the end of the product's life, investors will receive full return of their capital.
If, however, the index has fallen in that time, capital is eroded on a one-to-one basis with the index's fall. So if the index fell by 5%, investors would receive all their growth or income returns, and 95% of original capital invested.
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