Type: Growth plan
Aim: Offers the opportunity to make competitive above market returns even when the FTSE 100 index makes only modest gains over the investment term
Minimum-maximum investment: Direct and Isa transfer minimum £3,600 up to £500,000. Stocks and shares Isa minimum £3,600 up to £7,200
Term: Three years, maturity March 20, 2012
Return: Three times any rise in the FTSE 100 index, up to a maximum of 60%
Options: Eligible for pension portfolio investment within a Sipp or Ssas
Guarantee: Original capital returned in full provided the index/underlying assets do not fall by more than 50% during the term and fail to recover
Closing date: March 6, 2009 and transfer February 20, 2009
Commission: Initial 3%
Tel: 0800 234 6023
This is a three-year product that offers the potential of growth where return of capital is dependent upon the performance of the FTSE 100 Index.
Baronworth Investment Services director Colin Jackson says: “ In the current depressed market, the product may appeal to investors who are looking for returns that are possibly more than they can expect over a three-year term from other types of investments but are prepared to take an element of risk.”
He thinks the literature is attractively produced and easy to understand. he says other attractive features include the fact that charges are implicit and adviser remuneration of 3 per cent is in line with the market, but unfortunately there is no trail commission.
Any growth is taxed as a capital gain, so for investors who do not use all or part of their capital gains tax allowance, Jackson says their return could be totally or in part tax free.
Turning to less appealing aspects of the product, Jackson says there will be loss of capital if the 50 per cent protection barrier is breached at any time during the product term. For him, many similar products allow the barrier to be breached but provided that the final index is the same or above the start level, then capital is returned.
However, Jackson says the Barclays Wealth product “does not have this protection so it makes it a lot riskier than others on the market”. Also, the potential returns are capped which means, “investors are being asked to accept a potentially lower return but with greater risk.”
Jackson does not rate the product very highly. He says there are, and will continue to be, a whole raft of similar products where the risk to capital is less and that we are increasingly seeing products where the return of capital is only at risk if the index is 50 per cent lower at the end of the term and where it does not matter what happens during the term.
In other words, the level of the index could fall below 50 per cent but provided it is not below this level at the end of the term there would be a full return of capital. Jackson says: “This protection lessens the risk to investors.”
Suitability to market: Poor
Investment strategy: Poor
Adviser remuneration: Good