Barclays Wealth has come up with a product which is highly attractive to IFAs called the emerging markets optimiser. This is a capital-protected investment for five years but can be cashed in earlier without full capital protection.
There are two options. The global option is linked to the MCSI emerging markets index fund consisting of the indices of 22 countries headed by Brazil, China and South Korea and the eastern European option is linked to two equally weighted indices, the RDX and CECE representing Russia, Poland, Hungary and the Czech Republic. Investors in these indices would have more than doubled their money over the last five years to June 1, 2008.
As further protection, Barclays has introduced the optimiser which is designed to generate smoother enhanced performance rather than leaving the investor exposed to the relevant indices, irrespective of market conditions. The optimiser adjusts the exposure each day in response to changes in volatility compared with the “expected” level. This means that when volatility is higher, investors’ expo-sure to the index is lowered and when volatility is not so pronounced, investors’ exposure is increased. This risk-adjusting measure is automatically built into the product.
During the past five years using the optimiser, results have been similar to the returns on the indices.
Profits on this product are subject to capital gains tax unless invested through Sipps, Ssass and Isas. I recommend this product for all growth investors.