Have you considered a Capital Protected Fund?

March 17th 2009

·CPF enables investors to benefit from the growth of an investment linked to the UK stock market, while keeping the capital they invested secure if held until the Protection Date.

· It’s designed to offer investors the opportunity for potentially better returns than those available through Building Society investments.

· It’s linked to the growth of a chosen index – currently FTSE 100 Index.

· Investors benefit if there’s a rise in the Index but will not lose money if the index should fall, as long as they stay invested until the Protection Date.

· The derivatives are backed by Lloyds TSB during the Growth Potential Period.

Who’s suitable for a Capital Protected Fund?

A typical CPF customer will normally have a lump sum to invest and also requires an element of capital security.

CPF is ideal for cautious investors who:

· Wants the opportunity to potentially earn a higher return than a conventional fixed deposit

· Wants returns linked to a well known UK Index – FTSE 100

· Wants the security that their capital investment is protected at the Protection Date, even when the markets are performing badly.

 Although CPF is linked to the growth of the FTSE 100, this excludes any form of income payment. Tax rules can change. 

Changes to the charges

There is no Annual Management Charge (AMC) or Early Exit Charge. There is an Initial Charge (IC) which will be collected, and although deducted at the outset, it is added back to the investment at the Protection Date.

What happens at the end of the term?

At the Protection Date your provider will close the fund. Three months prior to this, investors will be offered the following:

Payment of the proceeds — this is the default option, if the provider doesn’t receive a response from the investor;

Investment in another CPF fund (if available);

Investment in a similar structured investment product, depending on what is available;

Investment into another fund.

Points to Consider

Pros                                                                          Cons

I don’t anticipate needing                                             I know I will need my

my money in the next 6 years                                      money in the next 6 years

I want to be able to access my money                          I want to access my

even it I make a loss                                                   money but do not want to make a loss

I want to know that I can get back                                I would prefer to put my money at                                                                                  least what I put in in a higher risk product to receive

Potentially higher returns

I have a minimum                                                        I can’t afford to invest in a single of £3,000 to invest                                                                                  payment and would rather invest regularly