Scottish Mutual has launched a new Income Bond linked to the performance of 30 selected stocks, 15...
Scottish Mutual has launched a new Income Bond linked to the performance of 30 selected stocks, 15 from the FTSE 100 and 15 from the Standard & Poor's 500.
Nick Kelly, product development manager at Scottish Mutual comments, "We have chosen 30 stocks from well established, successful companies spread across a number of sectors in the UK and the US, ranging from consumer good producers to heavy industries. We have included some of the well-known names such a Shell, Cadbury- Schweppes, British Telecom, Merrill Lynch, Exxon Mobil Inc and Microsoft".
With a minimum investment of £5,000, the bond offers investors a choice between an annual net income of 8.25%, a monthly net income of 0.67% or net growth of 26% over the three year and two months term. Capital is not guaranteed though, the investor will receive full repayment of capital if the stock do not fall by more than 30% from their initial level between 10th November 2003 and 10th November 2004.
However if a stock which fell by more than 30% during the term, restores at least its initial value, capital will be paid in full for that stock. The term is from 17 October 2001 to 17 December 2004 inclusive.
Each stock contributes to a thirtieth (1/30) of capital return and capital is cutback by 1% for each fall in stock level in the case where the stocks do not recover to initial level at end of the term.
Kelly added: "Unlike other soft barriers that can be breached at any point during the plan term, we have a barrier that applies only in the last year of a three-year and two-month term. This barrier is much more powerful, as it is less likely that an individual stock price will be significantly below its initial level after two years. Even if the stock falls by more than 30% from its initial level, full capital will be returned as long as it recovers to at least its initial level at the end of the product term. The Scottish Mutual Income Bond offers investors a competitive level of income with a level of risk," says Kelly.
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