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Kicking out in all weathers

IFA Investment Solutions

All-Weather Kick-Out Plan

Type: Capital-protected bond

Aim: Growth linked to the performance of the FTSE 100 index

Minimum-maximum investment: 3,600-1m

Term: Six years

Return: 12% of the original investment in year one if index is above its starting level, 24% in year two, 36% in year three, 48% in year four, 60% in year five, 72% in year six, or growth of 100% of the fall in the index subject to a 50 per cent cap

Guarantee: Original capital returned in full at the end of the term provided the index does not fall by more than 50% without returning to at least its original value

Closing date: May 26, 2008

Commission: Initial up to 5%

Tel: 0203 178 2198

This structured product combines the early maturity features of kick-out products with the bull/bear concept which provides potential returns in the event of a fall in the FTSE 100 index.

Baronworth Investment Services Colin Jackson says this product is suitable for clients who are not looking for income. One of the attractive features is that there would be return of capital even if the index falls. The level of the return depends upon how far the index falls during the investment term but does provide an element of comfort for those investors who wish to minimise the risk as to capital.

He believes that the potential returns are attractive but points out that they would be diluted as a result of the commission structure, which he feels is a potential drawback.

For investments via a self-invested personal pension or small self-administered scheme, the commission is fixed at 3 per cent, which is average. For other investments, the IFA can select the level of commission up to 5 per cent, which is deducted from the initial investment. This reduces the actual growth and makes it difficult for Jackson to rate the adviser remuneration.

Jackson finds the literature attractively produced, but not easy to understand. He suggests Arc’s bull & bear product as a competitor as it is similar, but easier to understand.


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

Overall Mark: 6/10


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