AIG is offering the best buy on guaranteed income bonds, according to market specialist Baronworth I...
AIG is offering the best buy on guaranteed income bonds, according to market specialist Baronworth Investment Services.
The best on offer it has found is AIG's four year bond, providing 5.31% per annum after basic rate tax, equivalent to 6.64% gross per annum, on investments above £40,000.
Colin Jackson, director of Baronsworth, said the guaranteed monthly and annual income bonds market is becoming increasingly competitive as providers strive to entice those investors wanting to avoid stock market volatility, but gain better returns than those offered by building societies.
The price war in the market has led to rates improving across the board. Although the bond rates are now almost universally attractive, Jackson anticipates further, albeit tiny increases.
He said: 'Product providers believe longer term interest rates are on the up and secondly it is a case of increasing market share. There are only a few providers in the market and it is very much rate driven.
'There are very narrow margins on guaranteed income products but there is a lot of interest from investors, as they receive preferential tax treatment if investing in guaranteed income bonds over building societies.'
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