Type: Guaranteed equity bond
Aim: Growth linked to the performance of the i-Shares MSCI emerging markets fund or an equally weighted basket comprising the Russian Depository Index and Ceceeur using a volatility strategy
Minimum-maximum investment: £3,600-£500,000, Isa £7,200
Term: Five years
Return: Variable for both the global and emerging European options dependent on volatility strategy
Guarantee: Original capital returned in full regardless of the performance of underlying investments
Closing date: August 29, 2008, August 18, 2008 for Isa transfers
Commission: Initial 3.5%
Tel: 0800 234 6021
This product is linked to the i-Shares MSCI emerging markets fund or an equally weighted basket comprising the Russian Depository Index and Ceceeur using a volatility strategy over a five-year term.
Baronworth Investment Services director Colin Jackson isn’t sure that this will be popular with IFAs and their clients as he feels it may have been launched at the wrong time.. However, for those clients who do not mind taking a punt over the next five years and are looking to invest globally, it could be of interest,” he says.
Returns are subject to capital gains tax, which Jackson sees as an advantage for the majority of investors who do not use their CGT allowance. It will also enable them to use their ISA allowance elsewhere.
“Adviser remuneration is slightly above the market rate but there is no renewal commission. Investors have the choice or either the global option or the eastern European option. It would need a sophisticated investor to decide which option to invest in or whether to invest at all.”
Looking at the potential down sides Jackson says: “The eventual return to the investor is unknown, apart from having the return of capital in the worst scenario.
“In my opinion, investors who put their money into a structured product need to have some idea of the likely return. The product literature is not particularly easy to understand.” He can find no direct competitors.
Summing up Jackson says: “The thinking behind this product is excellent but I believe it is too complicated for anybody other than a sophisticated and experienced investor.”
Suitability to market: Poor
Investment Strategy: Good
Adviser remuneration: Good