By Jenne Mannion Fsharp, the offshore internet bank, is to launch High 10, a sterling account offeri...
By Jenne Mannion
Fsharp, the offshore internet bank, is to launch High 10, a sterling account offering a combination of deposit-based and equity-linked returns.
At least 50% of the minimum £500 investment must be placed in a three-year equity-linked deposit account. Other options of 75% and 100% exposure to the equity-linked deposit account are also available.
The rate for the equity deposit is based on the performance of four major stock market indices FTSE 100, Nikkei 225, Euro Stoxx 50 and S&P 500. After three years, the rate on the account will be calculated as 70% of the growth of these equity markets.
These markets are weighted equally and closing prices are averaged over the final year to protect the client from any sudden downturns in the market which might occur near the end of the product life.
The pure deposit-based account offers a 10% rate of interest. Ian Montgomery, managing director of Fsharp, said: "High 10 is aimed at existing and potential Fsharp customers who have sterling deposits to invest and who are attracted to the flexibility and cost savings of banking on the internet.
"Through High 10 we are able to offer our customers a way to make their savings work harder, without putting capital at risk. We are able to offer the highest interest rate in the offshore market by combining this with stock market performance."
Montgomery gave the example of a customer who wished to invest £20,000 equally between the equity-linked deposit and the one-year deposit.
Of this, £10,000 would be held in a one-year deposit, on which a return would be 10% - equivalent to £11,000 at maturity after one year.
The other £10,000 would be held in an equity-linked deposit, the return on which would be calculated as 70% of the growth of the relevant equity markets. If the market grew by 100% over three years, the customer would receive 70% of this. In this instance, a £10,000 investment would give £17,000 at maturity after three years. In the event of no growth, or even a fall in the markets, the customer would still get back the £10,000 initially invested.
The official start date for High 10 is 25 April. To encourage early participation, all funds received ahead of the 20 April closing date will receive a bonus rate of 6%, up to the product start date.
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