THE popularity of guaranteed tracker bonds continues: BCP stockbrokers is the latest company to offer a guaranteed equity and deposit account (GEDA) and a Double Growth Bond.
The first bond, known as GEDA 12, places 85 per cent of the investor's capital on deposit in a Special Savings Account at 6.5 per cent fixed interest rate and DIRT of 15 per cent. The balance of capital is invested in a basket of blue chip US, European and Japanese stock. The investor can take either an income or capital growth from GEDA 12. A proportion of growth is locked in if certain conditions are met.
The second option is the five year Double Growth Bond in which 90 per cent of the investor's capital is guaranteed which rises to 100 per cent if at any time in the five years the markets grow by 10 per cent. The fund is invested evenly between US, Japanese and European stock markets and the bond guarantees that if the basket of equities rises by 80 per cent it will pay you double this amount, or 160 per cent. Your gains are locked in for the duration of the bond. Even if the markets do not reach an 80 per cent level you will receive double any growth over the five year period.
BCP requires a minimum investment of £5,000 and no encashments are allowed over the five year period of the contract. Guaranteed investments like these can be a suitable option for smaller investors but are unlikely to produce the kinds of returns available from direct equity investment.
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