Equity bonds being offered by National Savings and Investments (NS&I) have been branded "complicated and opaque" by the International Management Association (IMA).
The bonds, that are being described as offering "stock market growth potential with no risk to your capital" are in fact misleading, the group have said.
The IMA conducted research in which the values of these bonds were compared to the performance of three established UK tracking funds over a five year period.
The results showed that the guaranteed equity bonds were outperformed by the index trackers by between 2.9 and 3.7 per cent over each year.
Richard Saunders, IMA chief executive, said: "These findings are very significant. These products have been widely promoted in recent years as a risk-free way of getting a stock market-related return. In fact they offer the first but not the second."
He added that these type of bonds are an over-complicated way of obtaining the same returns that a good deposit account will deliver.
NS&I has announced that they will be cutting interest rates on several of its fixed rate savings by up to 0.50 per cent per annum.
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