The deal: It offers a rate of return of 10 per cent a year net of basic- rate tax on a minimum investment of pounds 10,000.
Don't get too excited: this only applies to half of the investment. The other half gets a more modest 6.5 per cent. The 10 per cent half is invested in a guaranteed one-year bond with GE Financial; the 6.5 per cent half goes into a Scottish Widows with-profits bond.
Plus points:This is the first time in five years investors have been able to get a double-digit return on capital guaranteed not to erode over one year. For anyone with over pounds 10,000 in a taxed bank or building society account, this would represent a very sharp improvement.
Drawbacks and risks: The 10 per cent is only paid in the first year. As Tim Whiting of financial adviser Johnstone Douglas points out, if investors want a high one-year return, why not put all of it in the GE bond?The Scottish Widows bond returns an uncompetitive 6.5 per cent. This would improve if clients qualify for a terminal bonus. Is it for the short-term investor looking for return, or the long-term investor seeking security? "There's a degree of the phoney marriage about it," says Mr Whiting. For long-term investment, higher returns may be had elsewhere.
Verdict: A schizophrenic product with half its heart in the right place. Better than a taxed bank account. But then, what isn't?
Marks out of five: Two and a half.
-Andrew VerityReuse content