multi-asset class capital protected product
Anglo Irish Bank in the Isle of Man is looking to launch a four-year multi asset class capital protected bond with an unusual feature - every 12 months it selects the best-performing asset class up to that point and locks in that performance, leaving the remaining asset classes to make up the performance in the following years.
The Sterling Capital Protected Bond is set to launch at the start of February 2005 and will give investors exposure to UK property, US dollars, gold and UK equities with a minimum investment of £20,000.
The bond invests in four indices: the FTSE 100, the Halifax House Price Index, US$ vs sterling (the investor gains if the dollar strengthens against sterling) and gold.
The underlying structure of the bond is that, in effect, investors get access to four options on the four indices. At the end of year one the top performing option is excercised, at the end of year two the top performing of the remaining three options is exercised, and so on.
Even if the combined result of the four years is negative, the product has a guarantee, so will return 100% of the original capital invested on maturity.
Anglo Irish will incorporate a fee structure of between 2% and 3%, depending on the option price when the bond starts. Any intermediary selling the product will get most of the fee, although the final details are yet to be decided.
The launch of the Sterling Capital Protected Bond is part of a strategy to expand out of the well-trodden path of guaranteed products that give limited exposure to one index and move into new areas.
In a seperate development, the company is making an effort to go beyond its traditional sterling-denominated client base with a series of multi-currency launches. It has added dollar and euro options on its instant access, 90-day notice and Privilege Bond accounts; and has done the same on the corporate side for its Business Base Rate bank account.
Privilege Bond customers have now been given greater access to their investments with the announcement that Anglo Irish has doubled the amount that may be withdrawn without penalty during the life of the bond from 10% to 20%.
The Business Base Rate Accounts are instant access accounts with interest paid at the end of each calendar quarter. The rates mirror the base rate for each of the currencies and are reviewed on a monthly basis effective from the date of change.
Anglo Irish Bank, IoM's Head of Treasury Gordon Drake said: "We have maintained the Business Base Rate Account in sterling for 10 years and it has proved popular with our corporate clients, but in recent months we have seen the demand increase for similar accounts in both dollar and euro."
This follows on from the November launch (and closure) of the dollar-denominated version of the Capital Protected Bond, a dollar-denominated product with a six-year investment term giving 85% participation a global basket of indices.
Partner Insight: For Blackfinch, the arrival of its IHT portfolio services was a 'natural evolution' in the group's offering and points to an established track record of returning cash to investors.
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