Nationwide launches new Protected Equity Bond
Nationwide Building Society has launched a new Protected Equity Bond. The new Bond, available as both deposit and ISA options, pays a minimum 7% gross return (1.13% gross AER), plus the potential for further stock market linked capital growth at the end of six years. Customers who invest in the Protected Equity Bond will also have the opportunity to take out a one or three year Combination Savings Bond paying up to 3.50% and 4.35% gross p.a./AER.
Protected Equity Bond
Minimum return: 7% gross (1.13% gross AER) at the end of six years.
Maximum potential return: Customers can receive 100% of any capital growth in the following three indices, FTSE 100 Index, DJ EURO STOXX 50 Index and S&P 500 Index, subject to final year averaging, up to a maximum of 50% of their original investment amount (equivalent to 6.99% gross AER);
The Protected Equity Bond may be an ideal solution for those customers who are attracted by the potential rewards of investing in the stock markets, but are concerned about the associated risks. This is because the Plan is designed to return the original investment in full at maturity, protecting investments if the stock markets have fallen in value. However, because money is not invested directly in the stock markets, investors won't benefit from any dividend income which could have been received if money had been invested directly in shares or investment funds.
The new Protected Equity Bond is the Stock Market Linked Savings Bond 9 provided by Legal & General (L&G).
The previous Protected Equity Bond available through Nationwide was withdrawn on Saturday 9 April 2011.
Cash ISA option
With the arrival of the new tax year, customers may be looking to make full use of their new annual cash ISA allowance of £5,340. Nationwide offers access to a variety of products designed to help customers try to make the most of their full ISA allowance. The Protected Equity Bond is one of those and is available as both a deposit plan and as a cash ISA.
Customers may also transfer-in their previous years' cash ISAs, including those held with other providers, without it counting towards their current year ISA allowance. This means that these savings can also benefit from the potential for stock market linked capital growth.
Combination Savings Bond
Customers who invest in the Protected Equity Bond will also be given the opportunity to take out an exclusive one-year Combination Savings Bond, paying up to a competitive rate of 3.50% gross p.a./AER, and an exclusive three-year Combination Savings Bond, also paying up to a competitive rate - 4.35% gross p.a./AER.
It could help savers as it is designed to help them make the most of their savings in the current low interest rate environment. Both products must be opened at the same time. The minimum investment for the Combination Savings Bond is £3,000 (or £3,600 if a Protected Equity Bond ISA is purchased) and the same amount or more must be invested in a six-year Protected Equity Bond.
Robin Bailey, Nationwide's director for savings and investments, said: "With the UK and other economies around the globe still on the slow path to recovery, many would-be investors may be wary of the continued uncertainty surrounding the stock market. However, the Protected Equity Bond offers a way for investors to benefit from potential stock market linked growth with the added security that their investment is protected from any negative stock market movements up to the date of maturity.
"The new Protected Equity Bond is designed to return your capital plus a minimum 7% gross - 1.13% gross AER - after six years, as well as a potential growth rate of up to 50% of your original investment when held to maturity.
"What's more, the Protected Equity Bond is also available as a cash ISA. Therefore, savers can now pay in their increased 2011/12 cash ISA subscription limit of £5,340 and benefit from tax free growth over the full term of the product. Combine that with the Combination Savings Bonds, which pay generous returns and provide a fixed interest rate, and it really demonstrates Nationwide's commitment to its savings customers."