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Barclays Wealth generates growth from unfamiliar source

Barclays Wealth

Light Energy Commodity Plan

Type: Capital-protected bond

Aim: Growth linked to the performance of the S&P GSCI Light Energy Index Excess Return index

Minimum-maximum investment: £3,600-£500,000, Isa £7,200

Term: Five years

Return: 100% of the growth in the index subject to a 90% maximum

Guarantee: Original capital retunred in full at the end of the term regardles of the performance of the index

Clsoing date: August 4, 2009, July 17, 2009 for Isa transfers

Commission: Initial 3.5%


This structured product from Barclays Wealth is linked to the performance of the S&P GSCI Light Energy Index Excess Return for five years. It provides full capital protection at the end of the term and 100 per cent of the growth in the index subject to a 90 per cent cap.

Baronworth Investment Services director Colin Jackson feels this is an attractive product for investors who are looking for growth as opposed to income. “The returns are dependant upon the S&P GSCI Light Energy Index Excess Return, which is capped at 90 per cent. Come what may, at the end of the term, there would be at least return of capital,“ he says.

The literature is attractive and extremely well written, making it very easy to understand in Jackson’s view. “The counterparty is Barclays Bank, which is rated as AA- by Standard and Poor’s – an important consideration in these uncertain economic times.”

Jackson notes that returns are treated as capital gains rather than income for tax purposes. “This means that investors who do not utilitise their CGT allowance can have all or part of their returns tax-free and use their Isa allowance for something else.” He thinks the adviser remuneration of 3.5 per cent is above the market rate, although there is no renewal commission. “

Turning to the potential drawbacks of the product, Jackson says: “ We would hazard a guess that not many investors would have heard of the S&P GSCI Light Energy Index Excess Return which may be a turn off. “ He also observes that any return is limited to a maximum of 90 per cent. “Also, the final index level is subject to monthly averaging over the final six months of the plan. This can protect investors from any late falls in the Index, but it may restrict growth if the Index rises.”

Jackson cannot find any similar plans that are likely to provide the main competition for this plan. he concludes: “For those investors who are not seeking income, but are looking for a potentially attractive return on their investment with no risk as to capital and are prepared to rely on a relatively unknown Index, this could be tempting.”


Suitablity to market: Good
Investment strategy: Good
Adviser remuneration: Good

Overall 8/10


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