If you are considering investing in one? Are you aware of the potential negative points of many tracker bonds such as lack of transparency, potentially high charges, limited potential returns, the fact that a 90% capital guarantee effectively means a 10% investment charge, no dividends reinvested, inflexible/fixed term etc.?
Been looking at Ulster Bank Emerging Markets Bond. I have no indication in brochure of an option 1 or 2.
They seem to guarnteee 100% capital. Otherwise I have no idea how to figure out what to expect on maturity.
frank
Can you clarify-does the 30% cap apply to the overall return (i.e. your return on investment), or is the gain in uplift in fund value capped at 30%?
E.g. You invest €1000. The cap on return is 30%. The par value of the fund is €1000 at investment. At maturity, the fund is worth €1500. Your return is €1,300 (if the cap is 30% of amount invested), but only €1,150 if the cap is 30% of the uplift.
ph4t said:Your return would be €1300.
ph4t said:But that product isn't a fund. I presume its a tracker bond so the way it works is that 10% of your investment buys options on the 4 indices, while 80% is used to buy a zero coupon bond.