Sarasin Investment Management has unveiled the Sarasin
guaranteed portfolio, a capital protected fund linked to the Sarasin CI
globalsar sterling balanced fund, which is a Guernsey-based unit
The underlying fund has a 16-year track record and invests globally in
a combination of equities, bonds and cash. Its objective is to achieve
capital growth with lower risks than a pure equity fund. Current
holdings include gilts, Cisco Systems, Tesco and Vodafone.
Investors will get 100 per cent of any growth in the underlying fund,
plus any income distributed by the fund, which has traditionally been
around 3 per cent a year but this is variable. The capital-protection
offered means that investors will get their original capital back at the
end of the five-year term less the charges levied on the fund.
The capital protection is provided by the A-rated Rabobank, but it will
not apply if the investment is cashed in before the end of the term.
Investors who sell their holding before the end of the term will pay an
early exit fee, which ranges from 1 per cent in year one to 0.25 per
cent in year four.
This structured product takes capital protection into the realm of
active management, as the underlying fund can shift its asset
allocation according to the current market conditions. For example, if
the fund value falls the exposure to cash will be increased. If the fall
is so dramatic that 100 per cnet goes into cash, it will not go back into
equities and investors will get their capital back.
This product differs from the rarer structured products that are linked
to a portfolio of funds, such as it allows investors to participate in the
income distribution of the underlying fund.
Although the structure is simple and the charges are transparent,
investors would need to understand how the underlying fund works. It
may be most suitable to people who are used to investing directly in
equities and who may be returning to the markets during the current