Type: Capital-protected bond
Aim: Growth linked equally to the performance of the Artemis income, Schroder UK mid-250, New Star UK alpha, Norwich property trust and Invesco Perpetual UK corporate bond funds
Minimum-maximum investment: £3,000-no maximum, Isa £7,000
Term: Six years
Return: Assured return – the greater of 19 per cent of original investment or 50% of the growth in the underlying portfolio, absolute return – 75% of the growth in the underlying portfolio, averaged return maximum protection – 100% of the growth in underlying portfolio, averaged return strategic growth – 200% of growth in underlying portfolio
Guarantee: Assured return – Original capital returned in full along with 19% of original investment at the end of the term regardless of performance of underlying portfolio, absolute return and averaged return maximum protection – Original capital returned in full at end of term regardless of performance of underlying portfolio, averaged return strategic growth – 80% of capital returned at end of term regardless of performance of underlying portfolio
Closing date: April 18, 2007
Commission: Initial 3%
Tel: 023 8033 4411
Skandia’s protected portfolio investment provides four growth options linked to an equally weighted portfolio of five externally managed funds with varying degrees of capital protection and return over a six- year term. The underlying portfolio of the protected portfolio investment comprises Artemis income, Schroder UK mid-250, New Star UK alpha, Norwich property trust and Invesco Perpetual corporate bond funds.
Baronworth director Colin Jackson thinks that combining Skandia’s excellent reputation with a basket of funds of equal repute makes this an attractive product for the IFA market. “There are various levels of capital protection and participation dependent upon the option selected – all are attractive. Any returns outside an Isa wrapper are subject to capital gains tax with options one and two, or a combination of income tax and capital gains tax with options three and four,” says Jackson.
He also thinks the literature is attractively produced and well written, while commission is in line with the market – although renewal commission would have been the icing on the cake.
However, Jackson observes that offering investors a choice is not without problems. “Very often, offering clients a choice means they do nothing at all. This product offers a choice of four options, which could prove to be a mistake. I would rather each option was packaged separately with it’s own specific literature,” he says.
Jackson regards this product as unique, with no direct competition. “He concludes: “If I were a potential investor I would probably go for option one, which provides 100 per cent capital protection and 100 per cent participation in the performance of the portfolio, with the added advantage of any returns being subject to CGT.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Good