Fourth issue of fixed-term deposit account linked to FTSE, S&P 500 and NIKKEI
Standard Bank has decided to offer its clients a much broader-based index-linked product for the fourth issue of its fixed-term deposit account.
The capital protected four-year account will be linked to the average of the FTSE 100 index, the S&P 500 index and the Nikkei 225 index.
The performance of each index for the Offshore Equity Growth Deposit Account is equally weighted and used to calculate the average growth of the index basket. For example, if the FTSE 100 grew by 40%, the S&P 500 by 15% and the Nikkei 225 by 5%, the average growth of the Index Basket would be 20%.
It is the first time that Standard Bank has created an account that is linked to the performance of three stock market indices. Standard Bank decided to use three indices instead of just investing in the FTSE 100 to give investors a wider exposure to different markets and spread the risk of the investment.
It is also the case that by using a spread of indices and not just one, Standard Bank hopes to make its product appeal to a wider audience.
Martyn Samphier, head of banking at Standard Bank Offshore, said: "Three indices were launched in order to appeal to a wider audience. We have a large number of clients in South America, the Middle East and South Africa where the FTSE 100 is of less interest than the other two."
Offered until 22 September, and maturing in 2008, the product is available in both sterling and dollars. The minimum deposit is £10,000 or $20,000. Sterling depositors will receive an interest return equal to 100% of the percentage growth of the index basket at the end of the deposit period and dollar investors will receive a return equal to 75% of any growth.
According to Samphier the return difference between sterling and dollar investors is dependent on interest rates. As the interest rate is lower in the US that it is in the UK, this has to come out of the return for dollar investors.
John Coyle, managing director of Client Priority Services at Standard Bank, said: "The account gives investors the potential to derive returns normally associated with the performance of the stock markets but without risking the original capital sum invested. This is also the first time that we have created an account combining the performance of three indices. We believe that the high participation rates in any index basket growth, combined with the four-year term, will represent an attractive savings option for many clients."
There are no up-front fees, and early investors will earn interest as soon as their funds are cleared, at a preferential interest rate of 4.5% sterling or 1.25% dollars per annum, until the commencement date.
Intermediaries who set up terms of business with Standard Bank can earn commission of 2% of any capital introduced into this product.
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