Over the years, nearly all stockmarket-linked bonds have returned capital in full to investors at the end of the investment period. There have been a few exceptions but even then they have paid back almost all the capital and performed better than if investors have been invested directly in the stockmarket.
There are, however, some that are seriously in danger of losing a lot of capital, notably the Canada Life bond linked to the Nasdaq index.
Most of the new products are much more capital-secure and, with most indices about 40 per cent off their highs, most current products look to be extremely good bets.
For IFAs who want to get some expert advice, a free conference organised by Future Value Consultants, which rates all these bonds independently, takes place on October 14 at the Landmark Hotel in London. Dr Tim Mortimer will be talking about the different classes of bond, with other talks from Credit Suisse, Scottish Life International, NDF, Abbey National, Pinnacle, Lehman Brothers,Citibank and Chase de Vere, whose representatives will be talking about how to assess structured products from an IFA's point of view.
I believe that all investment-oriented IFAs should attend this conference as I believe there is great demand for the right products. There are still some which give poor value for money, mostly issued by building societies, but there are some excellent ones with a lot of different innovations. Any product with at least 20 per cent downside capital protection is much less risky than investing in equities directly.
I know it is difficult to get investors to buy products when stockmarkets are so volatile but it is up to IFAs to persuade clients to invest when the market is low and so make themselves much more money.