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NS&I launches issue 18 of guaranteed equity bond

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National Savings and Investments has launched a new issue of its Guaranteed Equity Bond.

National Savings and Investments has launched a new issue of its Guaranteed Equity Bond.

This will offer a potential return that is linked to the FTSE 100 index – up to a maximum of 40 per cent over the five-year term – without any risk to investors’ capital.

For example, if the averaged index end level is 20 per cent greater than the averaged index start level at the end of the five-year term, GBP10,000 invested would earn a gross return of GBP2,000 at the end of the term. If the index end level was 45 per cent greater than the index start level at the end of the term, GBP10,000 invested would earn a gross return of GBP4,000, because the maximum return is 40 per cent.

The returns are calculated by comparing the start level of the FTSE 100 index (averaged over the first five days of the investment term) to the end level (averaged over the final six months).

While the returns paid on NS&I Guaranteed Equity Bonds are linked to the FTSE 100 index, NS&I does not invest the money in equities, so investments in the Guaranteed Equity Bond will not be eligible for dividends. Therefore investors may not get as high a return as they might through investing directly in the stock market. However, unlike investments in the stock market, any money invested is guaranteed 100 per cent secure, backed by HM Treasury. If the FTSE 100 index end level is the same as or lower than the start level, investors’ initial capital would be returned in full.

Issue 18 of the Guaranteed Equity Bond will be on sale until 11 August 2009, although it may close earlier if fully subscribed. Investments will earn interest at 0.5 per cent pa gross until the bond’s investment term starts on 26 August 2009. This interest will be paid when the bBond matures. The minimum investment level for this Guaranteed Equity Bond remains at GBP1,000 and the maximum investment is GBP1m per person or GBP2m for a joint investment.

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