Third party administrator New Direction Finance, in conjunction with Abbey National, is launching a ...
Third party administrator New Direction Finance, in conjunction with Abbey National, is launching a guaranteed Isa with a headline income of 9% over three years on 22 November.
There is also a growth option of 28% at maturity. Initial commission for IFAs of 3% is available. The offer period closes on 20 January. Although returns from the product are guaranteed, return of original capital is not. That depends on the performance of the EuroStoxx 50
Investors will receive all their returns plus original capital if the index does not drop more than 25% from its starting point by maturity. If the index does fall below that level, investors suffer a loss of original capital equivalent to the percentage loss in the index. So, if the index should fall by 50% by the end of the three year period, investors would receive their returns but only half of their original capital
Although the product can be bought as an Isa, New Direction Finance is also promoting sales of the product as a share outside the Isa vehicle. In this way, gains can be offset against an investor's yearly capital gains tax allowances, provided no other gains are realised in the year
Tim Mortimer, analyst at Future Value Consultants, said: "Over three years, 25% is a good buffer, particularly as it is unlikely that the index would drop to that level. With high volatility in the short term, using other products which fall quite rapidly if the index falls by up to 10%, you could quite easily end up 25% down
Tapered annual allowance headache
Our weekly heads-up for advisers
Acquisition completed earlier this month.
Changes to take place by next year
Launched 18 November