20% of your money is put on deposit with a guaranteed rate of 15% for one year. You can withdraw this part after one year, including your interest.
The remaining 80% of your money is invested in a Tracker Bond for 3 years 11 months, tracking Dow Jones EuroStoxx 50, S&P 500 and Nikkei 225 indices. There's no cap on growth but you only get 65% participation.
One side is obviously robbing Peter to pay Paul - the 15% interest is being subsidised by the Tracker Bond.
Participation of 65% is very poor and severely limits any possibility of growth. Then there's the fact that a Tracker Bond doesn't get any dividend growth from the shares on the indices that it tracks. If you simply invest in the shares (or a fund that invests in the shares) that comprise the indices above, you'll get 100% of the growth of the indices PLUS the value of any dividends paid during the investment period, less any applicable charges. You'll also have access to your funds and no predetermined exit date. But on the flip side, you'll have no capital guarantee.
Have a search for Tracker Bonds on Askaboutmoney - there's been plenty of discussion.
This AIB product is only the latest in a long line of similar ones, by the way. A previous issue was briefly discussed
here. Anyone know are AIB publishing the actual returns from previous issues?
First Active offer a [broken link removed]. Given that many Tracker Bonds are simply "bought" wholesale by Irish banks from multi-national product producers, it's possible that the AIB and First Active products are actually produced by the same firm. Not that this is terribly relevant to anything.