NS&I launches FTSE 100 linked Guaranteed Equity Bond

NS&I (National Savings & Investments) has launched a new Guaranteed Equity Bond (GEB) which matches the FTSE 100 growth without any risk to capital.

The new Guaranteed Equity Bond offers a gross return equal to the increase of the FTSE 100 over a term of 5 years.

The maximum gross return that can be earned is 35%.

The NS&I guarantee means that if over the 5 year period the FTSE falls or stays at the same level, the investors’ capital will be returned in full.

The fact the money is returned in full if the stock market falls is a key difference compared with investing directly into the stock market.

If the investment is made directly there is the potential for a higher return. This has to be balanced with the risk that the invested share value may also fall.

NS&I does not invest the money in equities even though the returns on the GEB are linked to the value of the FTSE 100. This means that investments are not eligible for dividends.

This new GEB is the 17th issue from NS&I and will be on sale between 21 April and 1 June 2009. There is a limited subscription available and it will close early if fully subscribed before the 1 June.

The minimum investment is £1,000 and the maximum £1 million per person.

The investment will start from 16 June and until this date money invested will earn interest at 0.5% pa gross.

All returns will be paid gross at maturity and will be liable to UK income Tax.

NS&I do not levy any fees or charges associated with the Guaranteed Equity Bond.