Newcastle Building Society, a U.K. thrift with over GBP3.8 billion (USD7.4 billion) in group assets, is offering a twist on a property-linked investment bond for more cautious investors. The thrift is marketing a four-year bond that splits investment 50/50 between participation in the Halifax House Price Index and a deposit account that pays the Bank of England base rate plus 0.5%. It closes to investors March 16.
John Ross, an official responsible for product development at the thrift, said it came up with the idea for the structure itself. The group has offered 50/50 bonds before, for example combining interest-rate deposits with FTSE exposure, and it has also offered popular investment products linked to the Halifax property index. "It's a revisitation of these," he noted. Newcastle chose the Halifax index after doing research on other property indices. "I think it's important that we use something that is well known by our retail business," he explained. He declined to disclose the investment bank the thrift worked with on the structure.
