First Active introduced its latest tracker bond last week, a four-, five- or six-year investment option in a limited group of European and US indices. Its first tracker, the Guaranteed Equity Bond Series 1, brought out five years ago, has just matured with a return of 79.92 per cent gross, a nearly 16 per cent gross annual return.

That particular tracker, like many of those introduced in 1993, only tracked the returns of one prominent index, the London FTSE 100, and not only guaranteed the return of capital, but full participation in any growth of the index and a six-month final averaging period which protects the built-up fund from any dramatic falls in the market.

First Active has noted this clause came into good effect over the past six volatile months "and enabled much of the growth attained to carry through to maturity".

Some commentators have criticised the whole notion of averaging clauses in the past, with some justification, says Mr Douglas Farrell of National Deposit Brokers, "but the six-month averaging in this case has worked spot-on", he says.

Mr Farrell, whose company operates the Tracker Bond Information Service (freephone 1-800322422), says that while the last five years have produced excellent tracker bond results, "the fact that most of the current bonds are halving the growth participation rate in the indexes suggests that investors should, at best, expect half the returns the bonds from 1993 produced - say around 3540 per cent gross. This is also assuming the same kind of stock market growth is also experienced again."