Type: Capital-protected bond
Aim: Growth linked to the performance of the S&P GSCI Agriculture Excess Return, S&P GSCI Energy Excess Retun, S&P GSCI Industrial Metal Excess Return, S&P GSCI Livestock Excess Return, and S&P GSCI Precious Metals indices
Minimum-maximum investment: £10,000-£2m
Term: Six years and two weeks
Return: 100% of the first 50% growth in the indices if the basket grows by at least 15 per cent, plus 125% of any growth in the indices above 50% or 50% of any fall in the basket below 30%
Guarantee: Original capital returned in full along with 15% growth regardless of the performance of the indices
Closing date: October 19, 2007
Commission: Initial 3%
Tel: 0845 009 1805
Meteor Asset Management’s pendulum commodities plan has a term of six years and two weeks. It aims for growth linked to a basket of five equally weighted Standard & Poors Goldman Sachs commodities indices – S&P GSCI Agriculture Excess Return, S&P GSCI Energy Excess Return, S&P GSCI Industrial Metal Excess Return, S&P GSCI Livestock Excess Return and S&P GSCI Precious Metals.
Baronworth director Colin Jackson regards this as yet another innovative product from Meteor Asset Management. “The capital is protected at maturity. There is a minimum return of 15 per cent that is not dependent on the performance of the underlying assets, which are a basket of five equally weighted commodity indices. “
Jackson thinks it is interesting that returns are based upon participation rates of 100 per cent and 125 per cent of the upside, dependent upon performance and 50 per cent of the downside. “On the face of it – heads you win, tails you also win, but the returns on the downside are less than the upside.”
In Jackson’s view, the literature is very well produced and easy to understand. “This is important taking into account the nature of the underlying assets. Returns outside a tax free wrapper are subject to capital gains tax, as opposed to income tax, which is a major advantage,” he says.
Jackson regards the adviser remuneration of 3 per cent as in line with the market although he adds that perhaps renewal commission would have been welcome. “There is no direct exposure to the equity market which, in the current climate, could be a good thing,” he says.
Turning to the potential drawbacks of the plan Jackson says: “The composition of the underlying basket is probably not at all well known to the investing public so could, possibly, be a turn-off.” He cannot find any other products with a similar underlying asset that would provide competition.
Jackson concludes: “Meteor seem to have the knack of producing products with, to put it nicely, unusual underlying assets. We are aware that product providers are always looking for alternatives to linking to the FTSE and similar but sometimes if a product is too way out, the average investor may look elsewhere.”
Suitability to market: Average
Investment strategy: Good
Adviser remuneration: Good