HSBC launches capital protected plan and capital protected ISA

HSBC Investments this week launches its Capital Protected Plan and Capital Protected ISA, designed to appeal to investors seeking tax-efficient solutions in gaining upside exposure to the UK stock market, without putting their capital at risk.

The HSBC Capital Protected Plan and HSBC Capital Protected ISA offer Capital Protection (subject to withdrawals) and 106% participation in any growth of the FTSE 100 Index at the end of the six-year Capital Protected Period (the final year of which is subject to averaging).

Investors can also benefit from an early release feature. If the FTSE 100 Index is up by 30% or more at the third year anniversary, investors will receive 130% of their Capital Protected Amount, which is the same as a 30% return on their original investment.

Importantly, the HSBC Capital Protected Plan, and HSBC Capital Protected ISA are highly tax efficient. Any realised gain from the Plan will be taxed as capital gains rather than income, enabling investors to benefit from their annual Capital Gains Tax (CGT) annual exemption amount. As a Stocks and Shares ISA, the Capital Protected ISA accepts subscriptions up to £7,200 (Tax Year 2008/09), with no liability to Income Tax or CGT on returns.

Elliot Fowles, Head of Structured Products at HSBC Investments, said amid current volatile stock markets, capital protected products which provide a high level of equity exposure, offer a viable investment solution for cautious investors.

“Investors have the peace of mind of capital protection, which, coupled with the added tax efficiency benefits whether via the ISA allowance or ability to be taxed as capital gains rather than income, will make a meaningful difference to the headline return.”

The offer period for the HSBC Capital Protected Plan and HSBC Capital Protected Plan runs from 7 April 2008 to 23 May 2008. Minimum lump sum investment is £3,000. The maximum investment for a 2008/09 Tax Year Stocks and Shares ISA is £7,200. There is no maximum investment if investing in the HSBC Capital Protected Plan or Transferring a previous or current Tax Years ISA held with HSBC or another ISA Manager. With no annual management charge, there is only an initial charge of 7% for the full Capital Protected Period. This is factored in to returns and the 106% quoted upside is net of this charge.