Cantor Protected Global 85

[Coffeeortea]

Hi There,

I'm looking at this as in investment option presented by a broker for personal funds sat in a bank deposit losing money. This is a combination of equity and bonds with the split determined by market outlook. I like it for the reasons explained to me which are

-85% Capita Protection of the highest value the funds every get to. So if I put in €100 the most I could lose would be €15 but if the value went up to €110 it's then 85% of the €110 and if it goes down again I get the protection at the higher level.
- It is taxed with CGT which is better than the 41% tax on other funds and I have my annual CGT allowance of €1,270
- I dont pay 1% on entry to fund and have daily liquidity. Broker says he gets nothing up front but 0.5% annually in arrears.
- This is rated very low risk.

What is the view here on this. I want my money to get a return while low risk and to have access without a surrender penalty and this appears to do this.

Thanks

 

[Brendan Burgess]

This thread is a bit old but explains why all these should be avoided

Tracker Bonds - Summary

Brendan, it doesn't seem that you got much of a response to your call for volunteers. Maybe this will get the ball rolling. Do what you will with what follows. =============== What is a tracker bond? ----------------------- All tracker bonds are fixed period/term products. Generally three...

www.askaboutmoney.com

 

[MugsGame]

The most likely outcome is you only get your 85% back. There is no free lunch.

This sounds like it has some unusual features, but typically these tracker bonds conceptually split your capital investment 3 ways:
1. A deposit account to provide the guarantee (and in this case the liquidity). Given negative institutional interest rates this is probably costing more than 85%.
2. Fees for everyone involved in designing/marketing/operating/selling the investment - let's say 5%.
3. A complicated financial bet (option) which is so cheap (let's say 10% of your investment) that most of the time it cannot provide any return.

Clever people have structured the product and marketing materials so that 3 sounds like a good bet. If it really was a good bet capable of providing a return, you should just buy the bet. You are probably better putting 85% in a deposit account and 15% directly into an ETF or similar.

 

[Marc]

Legendary investor Peter Lynch said;”never invest in anything you can’t illustrate with a crayon”

Why not just put some of your money in State savings certs to provide a guaranteed tax free short term fund which provides the defensive diversification part and invest the rest in a portfolio of non-eu ETFs so that you have better diversification, more flexibility and the same tax treatment?

That way you can have exactly the amount of risk of loss that works for you , less complexity and most likely lower costs to boot.

for example a 50/50 cash and equity portfolio would have ongoing costs of more like 1%pa compared to the 1.49% disclosed in the key features document

The portfolio protection can be replicated by simply rebalancing between the cash and equity buckets.

simples

Marc Westlake
Chartered Certified and European Financial Planner
www.globalwealth.ie

 

[Steven Barrett]

Those type of investments tend to get cash locked. So if there is volatility in the market, they will move to cash to protect the guarantee. They then find it difficult to get out that cash position as they are waiting on the right moment and don't want to have to buy high. But if markets are recovering, they will have no choice. But they have already missed the bounce and they have to guarantee the unit price (this is what is guaranteed), so they stay in cash.

You won't find much support for these products on here, they are rubbish.


Steven
www.bluewaterfp.ie