Type: Capital-protected bond
Aim: Growth linked to the performance of a portfolio of industrial metals and energy-related commodities
Minimum-maximum investment: 15,000-no maximum, Isa 7,000
Term: Five years
Return: 180% of any growth in the commodities portfolio
Guarantee: 90 per cent of original capital returned in full regardless of the performance of the underlying investments
Closing date: November 25, 2005 for direct investments only
Commission: Initial 3.5%
Tel: 020 7861 0900
Dawnay Day Quantums Protected Commodities Turbo is a capital-protected bond linked to a basket of eight industrial metals and energy-related commodities over a five-year term.
Zooming in on the positive features of the product Baronworth director Colin Jackson says: This is a very attractive participation rate at 180 per cent but the trade off is only 90 per capital protection. This could be attractive to those clients who are looking for a higher return but with an element of risk to their capital.
He also highlights the fact that returns are subject to capital gains tax as opposed to income tax, so it could be of interest to people who have not used their CGT allowance. They will then be able to utilise their ISA allowance for something else, notes Jackson.
He regards the level of commission at 3.5 per cent as slightly higher than market rate.
Highlighting the potential drawbacks of the product Jackson says: The asset class is unusual consisting of eight equally weighted commodities. This could be a turn off for would-be investors.
Jackson feels literature is slightly complex not only due to the nature of the asset class but also because it includes details of Dawnay Days other commodities product. The Protected Commodities Accelerator V utilises the same asset class but with 100% capital protection coupled with 150% participation, which is still very high, he says.
Jackson concludes: We are not aware of any other products offering such a high participation rate even with an element of risk and an unusual asset class so cannot make any comparison.
Suitability to market: Good
Investment strategy: Average
Adviser remuneration: Good