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Man brings in fourth version of offshore bond

MAN INVESTMENT PRODUCTS
Man-IP 220 Plus Series Four
Flexibility 5.3
Company&#39s reputation 4.6
Past performance 7.0
Charges 7.0
Commission 4.3
Product literature 5.0
Man Investment Products has introduced the fourth in its range of
Man-IP 220 funds. Man-IP 220 series 4 is an offshore bond
registered in Bermuda. The bond is divided into two halves, with one
section investing in 100 global futures markets and the other section
investing in a fund of hedge funds.

Looking at how the plan fits into the market, Pack says: “The hedge
fund market is growing all the time and is very popular with the
professional investor. However, among the general public it is an
unknown market.”

Shaw says: “With the recent stockmarket slump, clients are looking
for something not related to equities. This would certainly fit the bill.”

Overy says: “As we do not currently deal with expatriates, the bond
does not fit into our market at all. The bond is a specialist product for
high-net-worth clients who are prepared to take on fairly high-risk
products. Therefore the market range is very limited.”

Moving on to the types of clients that it is suitable for, Shaw says:
“This is for only the most sophisticated clients, although some clients
may well be shown the product by their stockbrokers.”

Pack agrees that the bond is for the very experienced investor, while
Overy says: “The bond is suitable for high-net-worth clients who are
prepared to take risks. Possible clients are dealers using
commission or bonuses to purchase the bonds.”

Addressing the marketing opportunities that the plan will provide,
Pack can see none for himself. Overy says: “For us, unfortunately
none. For brokers or IFAs who deal in this market, the guarantee as
offered will help the sales process.”

Shaw says: “It would only be relevant for IFAs with substantially
wealthy clients, especially in view of the minimum investment of
50,000 dollars or euros.”

Evaluating the main useful features and strong points of the product,
Overy says: “The plan&#39s advantages include the past performance
and the guarantees, as well as the fact that there is no initial charge.”

Shaw says: “One advantage is that the structure is a directional
trading system that seeks to take advantage of price trends in around
100 global futures markets. Hedging strategies will also be in place.
Being offshore may be attractive to some clients.”

Pack says: “The strong points are the guarantee of money back and
the lock in by zeros.”

The panel is more vocal about the disadvantages of the product.
Shaw says: “It is a very difficult product to understand and is more
risky then the literature would have us believe!”

Pack says: “The main disadvantage is that the bond is very complex,
with 160 per cent gearing. Another disadvantage is that it invests in
Man&#39s own funds. Its target market of financials, currency and
commodities for its investments speaks volumes about the possible
risk involved with this product.”

Overy says: “Man Investments is a relatively unknown company. Also
its investments are offshore, so it is not subject to the same
regulations as in the UK, which might be seen to be a drawback.”

Moving on to the flexibility that the product provides, Shaw says:
“There is not a great deal of flexibility and although there are capital
guarantees, these do not kick in until 2012 or 2013.”

However, Overy says: “Given the nature of the product and its limited
market, the flexibility that it offers is very good.”

Commenting on the reputation of Man Investment Products, Pack
says: “I have never heard of this company and I suggest that the
general public has not either.”

Overy admits that he has never heard of the company at all and Shaw
says: “The reputation is good, but Man Investment Products is not
widely known in the general investment community.”

Looking at the past performance record of the company, Overy says:
“As published, its past performance is very good.”

Pack says: “Between 1990 and 2001 the past performance of Man
appears to be quite impressive.” Shaw is more uncertain. He says:
“Past performance is good, but the future prospects for lump sum
investments seem as uncertain as I can remember for some time.”

Identifying the products that provide the main competition, Overy says:
“Competition will come from other offshore investment bonds and
trusts. Returns may not be as good as those illustrated in the
brochure, but other offshore options are offered by better known
UK-based companies.”

Pack thinks that the competition will come from the various funds of
hedge funds that are being launched at the moment. Shaw says:
“There are not many products offering competition. However, GAM is
one that springs to mind.”

Looking at the charges, Pack and Overy think that these are fair and
reasonable. Shaw says: “Charges are low, especially if the bond is
held for six years.” The panel also agrees that the level of
commission is fair and reasonable.

The panel is not impressed by the product literature. Pack says: “The
literature is very complex and is also unreadable to the average
investor.”

Shaw says: “It is well laid out but contains far too much
gobbledygook. Laymen will find the product information somewhat
difficult to follow.”

Overy strikes a slightly more positive note. He says: “The literature
has very good presentation but has too many abbreviations which are
not explained within it. Frankly I don&#39t think that the literature would
qualify for the &#39clear English&#39 crystal mark.”

Summing the product up, Shaw says: “The investment is a little
esoteric. It is possibly suitable for clients who have a well diversified
portfolio, most of which is offshore.”

Pack says: “The target of 18 to 20 per cent growth a year appears to
be speculative even with zero lock ins. Also, the hedge fund market is
currently flavour of the month, but it could go the way of the technology
market. Overall, this is a very risky product.”

Colin Shaw, Director, SFS (London), Brian Pack, Principal, Brian Pack
Financial Services, Peter Overy, Principal, Overy & Boom.

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