Stockbroker BCP has just launched the EuroZone Tracker Bond, its version of a Eurotracker, linked to the performance of the Dow Jones EuroStoxx 50 index.
This new bond, which requires a minimum investment of £5,000 (#6,349), guarantees 90 per cent of the capital and will pay out 100 per cent of any growth in the index over the five-year term. This level of growth payout is quite high for recent trackers which have been limiting the share of performance to as little as 40 or 50 per cent.
One feature that singles out this bond is that the underwriter, ACCBank may decide, if markets do exceptionally well, to redeem the bond early to lessen its potential liability to the bondholders. If it does decide to redeem the bond it will pay out 100 per cent of capital plus either a 10 per cent, 20 per cent, 30 per cent or 40 per cent gross return depending on the anniversary year. The bondholder cannot decide to encash the bond early.
Because it is a deposit-based tracker, the fund will be taxed at the standard 24 per cent DIRT rate. Investors should compare this bond with others on the market before making any final decision. For more information contact BCP Stockbrokers at (01) 6684688.
(# - Euro)
