tracker bonds

narkyhead

Registered User
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hi everybody just looked at the ulster bank tracker bonds looks good
100% capital secure. potential to double your investment.
I have no experience of these products . I would appreciate opinions from people who know about this sort of thing. The three year account was what i had in mind but will take advice on this.
 
hi everybody just looked at the ulster bank tracker bonds looks good
100% capital secure. potential to double your investment.
I have no experience of these products . I would appreciate opinions from people who know about this sort of thing. The three year account was what i had in mind but will take advice on this.

I don't know this one in particular but in general be very careful about 100% capital protected tracker bonds like this. They tend to be very expensive with lots of hidden charges and tend not to be very transparant. There is no such thing as a free lunch so think about what you are saying when you say they are offering you up to 100% returns while at the same time guaranteeing your original investment. Not all products are the same of course but I generally avoid them.

I remember threads on this subject before discucssing the technicalities of how they work if you do a search.
 
if you don't mind taking info on investments from a guy called Bernie Madoff, I am familiar with this bond. There are no fees or charges levied and the capital is 100% secure. there are two options open 1) 5 year 11month option - 30% of the investment is placed in a two year fixed deposit paying 10AER fixed. After year 1, the 10% is returned to you and after year 2, the 30% capital plus a further 10% is returned to you.

the remaining 70% is placed on deposit and tracks the performance of a basket of the 30 largest companies in the world. The return to you is double the performance of the basket of shares but is capped at 60% overall for the 5 years 11 months.

2) the 3 year 11 month option is straight forward - no depost option just double the performace of the basket, this is capped at 40%.

The thinking behind it is that a lot of the growth in equities over the past 5 years or so has been driven by mergers and acquisitions, the mega caps were left behind and represent good value, risk averse investors will be flocking back to these over the coming years.

The things to look out for are that the returns are capped so max return will be a little over 10% per annum. Also, the bond uses averaging over the final 6 months so if the basket dips for the last six months of the term, your returns may be impacted hard even if the previous growth was strong.

Of course this can work to your advantage if the reverse happens. Remember as well that you are foregoing access to the funds for the term of the investment.

By the way the Ulster Bank have run this investment in the past. The first incarnation matured around 8 months ago with a total return of 65% over a term of 6 years, the second series matured 3 months later with a 0% return!

Hope this helps
 
thanks bernie hope you get out soon....i think. On a serious note i will not take up this, it does seem a bit of a chancy thing. Your opinion is taken in good faith. I was speaking to a person at investec this morning on the phone and I think i will take up the fixed term {1 year} and give myself time to think. unless you know something better
 
There are no fees or charges levied
This is a common misconception associated with Tracker Bonds. Of course there are fees and charges. They are just buried deep in the product.

Just try asking for all of your money back after 12 months and see how much of it is 'on deposit'
 
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