Keydata Investment Services has introduced the secure growth portfolio, its first capital protected product.
The secure growth portfolio is a guaranteed growth bond offering links to six open-ended investment companies over a five-year term. These are the Norwich Union UK growth, JP Morgan Fleming premier equity growth, Newton income, Newton continental European, Threadneedle European select growth and Threadneedle American select growth funds. To calculate the growth the portfolio will average out the monthly prices of each fund, each of which has an A rating or above from Standard & Poors. None of the funds will make up more than 25 per cent of the portfolio.
Investors will be able to choose one of two options depending on their attitude to risk and return. They can opt to have 100 per cent of their capital protected and take 100 per cent of the average of any growth in the funds. Alternatively, they can have 90 per cent of their capital protected and take 140 per cent of average growth.
The Keydata product is similar to the JP Morgan Fleming capital protection global growth product, which is also a guaranteed growth bond. The JP Morgan Fleming product links to the JP Morgan Fleming premier equity growth, global fixed income, European growth, US growth and South East Asia funds and the capital is returned in full at the end of five years. However, the JP Morgan Fleming product only offers 75 per cent of the average growth in the funds, compared to the 100 per cent or 140 per cent offered by Keydata.
Both products have one drawback, however, if the investor pulls their money out during the five-year period they might not get their original capital back if the funds have not performed well. They should be prepared to lock their money away for a full five-year term.
According to Standard and Poors the JP Morgan Fleming premier equity growth fund is ranked 39 out of 206, Newton continental Europe is ranked 10 out of 79, Newton income is ranked 12 out of 206, Norwich Union UK growth is ranked 13 out of 206, Threadneedle American select growth is ranked four out of 70 and Threadneedle European select growth is ranked six out of 79 funds, based on £1,000 invested on a bid-to-bid basis with gross income reinvested over five years to November 5, 2001.