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Tilney investment tailored to measure

TILNEY INVESTMENT MANAGEMENT

Opal Tailored Solutions

Type:
Capital-guaranteed fund of hedge funds

Aim:
Income or growth linked to the performance of the Opal Optimum Master Fund

Minimum-maximum investment:
£10,000-no maximum, Isa £5,000

Term:
Five years and one month

Guarantee:
Secure income and secure growth options &#45 Original capital returned in full regardless of performance of underlying fund, high income and high growth options&#45 80% of original capital returned regardless of performance of underlying fund

Return:
Secure income and secure growth options &#45 100% growth in the underlying fund paid annually or at end of term, high income and high growth options &#45 175% growth in the underlying fund paid annually or at end of term

Place of registration:
Luxemburg

Charges:
Initial up to 5%,
annual 1.75%

Closing date:
June 18, 2004, Isa
June 4, 2004

Commission:
Initial up to 5%

Tel: 0808 100 1166

Tilney Investment Management&#39s Opal Tailored Solutions is a capital-protected fund of hedge funds that offers investors a choice of two income and two growth options. Investors can also select the level of return and the degree of capital guarantee.

Informed Choice technical director Martin Bamford thinks this product will provide a good way in to the hedge fund market for more cautious investors who require additional diversification in their investment portfolios. He says: “Having a guarantee set at 100 per cent of the investment amount, and providing 100 per cent of the underlying fund&#39s return, is a useful incentive to start making investments into a hedge fund.”

According to Bamford, while the underlying fund will be difficult to understand, the financial security associated with the plan will provide some reassurance. He points out that a version with an 80 per cent guarantee is also available, which offers 175 per cent of the fund&#39s performance at the end of the term. He explains: “The averaging of the fund&#39s performance over the last six months will reduce the risk of the underlying fund falling in value before the end of the term.”

Bamford thinks the product can be used to add an important level of diversification to a client&#39s investment portfolio. He says: “The range of different guarantee and investment options available will enable the adviser to mix and match the desired level of guarantee.”

On the downside Bamford thinks the term might be too long for some clients. He adds: “As with most guaranteed products, the security is dependent upon the financial security of the guarantor. In this case the guarantor is Societe General which has a fairly good strength rating.” He also feels the returns available on early encashment are complicated for the investor to understand and that the calculation of the annual income options will also be difficult for investors to grasp.

BROKER RATINGS

Suitability to market: Good
Charges: Good
Adviser remuneration: Good

Overall 9/10

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