View more on these topics

Keydata introduces novel idea

Keydata Investment Services

Income Property Bond

Type: Offshore bond

Aim: Income by investing in a portfolio of residential apartment complexes in the US

Minimum-maximum investment: £4,000-no maximum, Isa £7,000

Term: Six years

Return: 7% income a year or 1.75% a quarter

Place of registration: Luxemburg

Closing date: October 20, 2006

Commission: Initial 3%, annual 0.5%

Tel: 020 7710 6906

This bond from Keydata aims to provide income of 7 per cent a year or 1.75 per cent a quarter by investing in a portfolio of residential apartment

Charter Devon Law principal Michael Posner says: “Keydata is offering the opportunity for investors to gain a higher than average fixed income over a six-year investment period through the current and potential holdings of apartment blocks in the south east of the US via its appointed property management agents Miles Properties.

The income of 7 per cent a year or 1.75 per cent a quarter is attractive to Posner. “It is stated that, at the end of the six year investment period, because the capital return is not wholly dependent on the sale of the acquired and renovated apartment blocks, the capital should be repaid in full. Money invested will be held in escrow by a Standard & Poor’s “A” rated company.”
Escrow is a legal arrangement where an asset is delivered to a third party, called an escrow agent, to be held in trust while waiting for the contracts to be completed.

Posner notes that the money will be held in escrow until the managing company, Miles Properties, has satisfied independent international property consultants, who in turn must satisfy the escrow agents that any proposed property is suitable for investment to provide the headline return. “In addition. Keydata oversees the matter, which provides the investor with additional protection,” says Posner.

In Posner’s view, Keydata has a good reputation for designing and offering structured investments. He think the ability to diversify property holding returns into a sector that would not normally be available to the average UK investor, linked to a headline rate of 7 per cent, may well be of interest. “Early investment attracts interest at 3 per cent and the interest growth is added to the initial investment. For direct investment, the income received will be taxable, at the investors’ rate of tax and the product is designed to be held for the full six year period, with a reducing early encashment charge being levied,” says Posner.

Posner regards the marketing material and key features as well presented as they deal with matters in a clear and un-confusing fashion.

On the downside Posner says: “Although Keydata indicates that a property downturn in the US will normally lead to an upturn in the rental market, which will assist to generate the income, concern is that the slowdown in the US housing market could be a great deal stronger than the orderly one foreseen by the Federal Reserve.”

He notes that new property sales in July 2006 were 22 per cent lower than a year earlier, with unsold new homes standing at their highest figure for 10 years. “Miles Properties and Keydata may well consider that a fall in the housing market is a buying signal to a wealthy investor, but if the actual effect is a recession in the USA, will that presage a rise or a fall in rental income, as the glut of property leads to a lack of competition in the rental sector? It is a difficult question to answer, and they may well be right in their assumptions, but a headline rate of 7 per cent and no offer of a share in the capital growth is not, in my view, a sufficient incentive to invest.”

Posner concludes that the product is novel and he does not see any direct competition until another structured product is launched.

BROKER RATINGS

Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average

Overall 5/10

Recommended

Axa successfully secures acquisition of Thinc Group

Axa’s bid for Thinc Group has finally gone through after more than 96.2 per cent of Thinc shareholders accepted the French insurance giant’s offer.Thinc will cost Axa up to £100m. The insurer placed a formal offer of £70m for Thinc based on its performance in 2009 and pledged a further £30m to refinance its debt […]

The bear essentials

Ihave focused on one of the Miton Optimal funds – the strategic fund – already. It has had a hard time this year due to a big cash bias and its limited ability to buy into alternative asset classes. Miton therefore proposes to launch the Arcturus fund, which will be a non-Ucits retail scheme taking […]

Capita buys Synaptic Systems

Capita has bought Synaptic Systems in a bid to further extend its reach into research information and software. The deal, for an undisclosed sum, was announced today and is thought to be an ideal fit with Capita’s Enabler initiative, incorporating Webline and Quay Software. Synaptic Systems are currently used by 10,000 IFAs and many product […]

Guarantees in the retirement income market

Lorna Blyth, Royal London  Do guarantees benefit customers and, if so, when? To answer this conundrum we commissioned Millimans, a global actuarial consulting firm, to conduct an independent review of the UK retirement income market and whether guarantees really do offer customers better value for money. The brief The study was one of the most comprehensive undertaken […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com