HSBC is developing a stock- market linked Tessa-only Isa in preparation for a mass maturing of Tessa...
HSBC is developing a stock- market linked Tessa-only Isa in preparation for a mass maturing of Tessa accounts which it expects to hit in the first quarter of 2001.
It is currently consulting with large brokers about the exact shape the product will take, but Investment Week understands it will be similar in kind to the 1996 stockmarket-linked Tessa which offered up to 155% total return.
When Tessas were set up in 1991 widespread publicity created a substantial and immediate inward flow of over £5bn of retail investment in the first quarter of 1991 according to Inland Revenue figures.
In the early months of 1996 those initial investments matured, and in many cases were rebroked into new Tessas. It is this bubble of cash, just a part of the total £30bn-plus Tessa industry, that HSBC hopes the planned Tessa-only Isa will tap into, retaining old business and attracting roll-overs from Tessas run by rivals.
Rob Fisher, head of campaign marketing at HSBC Investment Funds, said the product was still in the early stages of development and no firm decision had been taken over the market or menu of markets to which it would be linked.
He said: "We will be looking to offer a stockmarket linked product so it looks and feels very similar to the one which investors have at the moment. We will be talking to the bigger brokers and looking at the stock market links we will need."
He said HSBC was also including consumer research in the development process. There will be no explicit charges for the rollover which under Isa regulations can only include the original capital investment of £9,000.
As with its capital protected range, charges on the Tessa-only Isa are invisible to customers as they are taken into account in design of the product.
HSBC would be looking at paying IFA commission on the product recognising the importance of intermediary advice in making investment decisions on stock market-related products.
HSBC estimates those extra funds accumulated over the five-year lifetime of HSBC's stock market linked Tessa accounts could amount to around £4,950 based on the current position of the FTSE 100.
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