Autopilot by Natwest - any good?

Titeropewalker

Hi all

I have just been offered Autopilot (4) by a financial advisor at Natwest. It sounds too good to be true. Rate of return is dependent on the stock market performance but it is actually just a deposit account. (i.e. you never actually buy any shares) It sounds as if you can benefit from increases in stock market but are protected from the decreases because you get a guarantee of getting your capital back if you leave it with them for 5 years. (although I realise that if there is NO return then the capital has greatly diminished in buying power)

Has anyone had one of their earlier versions of this product and is it any good? You can put Cash ISA money into it and preserve the tax free status i.e. no CGT or income tax on any gains made)

atypical

Here's the link:
http://www.natwest.com/private/banking/savings/structured-deposits/special-edition-bonds.ashx

Seems to track a hodgepodge of indexes/ETFs. They talk about how they have an "obligation to repay your initial Deposit in full" and then say "any return will be based on market value less expenses and may be less than your original investment". Is that contradictory or is it just me?

Someone who knows better than me will be along soon I'm sure, but I'd guess they'd advise against it.

Reaper

It sounds like a variation on a GEB which are not held in much regard here - they tend to have nasty small print.

I've only looked quickly at this one but one thing I noticed was the growth limitation. They invest in 4 sectors. The growth of each one is capped each month at 6.75% but any losses are unlimited.

To take an extreme example let's imagine Developed Markets, Emerging Markets, and and Commodities all rose 20% in a month while Property dived 20%.

Despite the booming market your overall growth would be (6.75 + 6.75 + 6.75 - 20) / 4 = 0.06%

Alternatively all 4 funds could rise 10% one month and then fall 10% the next month in which case instead of being back to where you started you would be be -3.25% down.

OK these are rather extreme examples. I'm really just making the point you have to check the small print which seems to be largely missing on the web site. Other questions include who is providing the guarantee part (often not the same company and if they were to go bust the guarantee would be void), whether the growth includes dividends, who/what exactly the money is being invested through, and what fees are involved (they say no management fees but there could be others involved in the trading which reduce the returns).

PrivateBanker

Its a very cautios investment.
Effectively a deposit liked to areas with more potential than interest rates in the UK.
Capital protected at the end of the term (only possibility of less if encashed early)
Couterparty is RBS (same company) and it falls under the FSCS scheme for depoits (EUR100K from 31/12/2010)
Rules based, not designed to cope with extremes detaled above, but looking at long term trends in areas with far more potential than UK interest rates.
No risk to capital (like cash) but better potential returns than cash.

I you are happy with cash rates less tax(20%/40%/50%) and inflation (3% or 5%) then no need to take any risk. If you want the chance to do a bit better.....

jimjames

You might want to read this post which sounds like a similar product.

https://forums.moneysavingexpert.com/discussion/2885068