http://www.ncbs.co.uk/investment/NOTE_Index_linked_ISA.htm

This looks like a good deal if you believe inflation is just going to go higher.

It now beats the Leeds BS index-linked ISA @ 2.5% + RPI (currently therefore paying 7.1% per annum).

http://www.leedsbuildingsociety.co.uk/savi...buster_isa.html

The benefit with the Leeds BS is that the RPI measure runs from April to April and as we've have >4% RPI from April already, that's at least 3 months of the annual measurement period for payout already in the bag. If RPI averages 4% YoY, this ISA will still pay out 6.5% which beats just about every fixed rate deal to date.

oes anyone know how Leeds or National Counties Building Societies are going to pay this rate of return?

What I mean is they don't know what the RPI is going to be in any given month or year, so how on earth can they promise to pay above the RPI or are they going to issues mortgages that track the RPI + 3%.

My concern is that these building societies are going to take the money and attempt to outperform the RPI say by leveraged commodity investments.

Does anyone on the inside know how these will work in terms of providing a profit for the BS? I think this sort of return should be good over the next few years but I wonder what risks the building societies will be taking to give back these returns.

These products effectively wrap up the returns available from UK government index linked Gilts.

The same procedure has been used for years by NS&I who provide the "consumer" version of these bonds.

I suspect if NS&I have been providing RPI + some additional return for decades, Leeds and National Counties can too.