WOOLWICH PLAN MANAGERS
Woolwich Capital Growth Plan
Type: Guaranteed equity bond
Aim: Growth linked to the performance of the FTSE 100 index
Minimum-maximum investment: £3,000-£500.000 Isa £7,000
Term: Six years
Return: 25% growth on initial investment or 50% growth in the FTSE 100 index
Guarantee: Original capital returned in full regardless of performance of index
Closing date: April 16, 2004, April 2, 2004 for Isa/Pep transfers
Commission: Initial 3%
Tel: 0845 070 5087
The Woolwich capital growth plan is a guaranteed equity bond linked to the FTSE 100 index for six years, providing growth of either 25 per cent of the original investment or 50 per cent growth in the index.
HHPG director Mike Gilbey thinks this is a well presented product that should do well in the current market place despite its lack of bells and whistles. He says: “The Woolwich capital growth plan is highly suited to the current market sentiments for those looking for medium-term, lower risk capital growth - for example, school fees planning or supplementary lump sum retirement planning. The literature has a nice 'comfortable' appearance and the presentation is very good, with clear risk warnings without being alarmist.”
Gilbey notices that the important dates are clear and thinks that even the small print is not that small. However, one criticism he makes is that the literature is a little too much, with numerous repetitions. On the other hand he sees some merit in this allows for easy referencing when presenting or dipping in and out of the literature.
Gilbey is also critical of the 12 month averaging which he says is unduly long in the current economic environment. He explains: “The final 12 months have potentially the best growth prospects and should be maximized. While some averaging - say over the last three or six months - is desirable to minimise the effect of a sudden stock market crash, 12 months of averaging is unduly pessimistic bearing in mind the protected nature of the product.” He also thinks the literature could provide a better explanation of how the product works.
Gilbey mention early partial encashment is not allowed and feels the affect of an investor's death is glossed over. He adds: “Partial encashment flexibility can be overcome for larger investments by making multiple applications but death is difficult to overcome. Both could be better presented with some worked examples.”
Looking at how this product will fare compared to its competitors Gilbey says: “There is a rush of similar FTSE 100TM tracker products currently available which are targeting the Isa season. Some of the Woolwich's competitors, such as Nvesta offer 105 per cent of FTSE 100 index returns to partially compensate for loss of dividend income and an early close option. The early close feature is highly attractive to lower risk investors and appears in many products now. In addition there are the life assurance-based secure and protected funds all competing for the capital growth funds currently available.
“The more interesting competitors are those currently offering a combination of indexes to track, for example the FTSE 100 and Halifax House Price indices, such as the new GE Life capital secure investment plan. The idea appears to be to try to offer negatively correlated asset classes to provide a quasi portfolio structure in one product.”
Suitability to market: Average
Investment strategy: Average
Adviser remuneration: Average