Aldermore Guaranteed Return Bond

coolmercury

Hi - Am a first time poster, so apologies if this has already been covered. Has anyone done any research on the (new?) Aldermore Guaranteed Return Bond? Just came across them on the Moneyfacts best buy, and then clicked through to the Aldermore website (sorry, as a new user I cannot post links).

The return profile on the Fixed Option looks great. Just checked the website, and the literaure claims it's FSCS-protected. Is that true - would this be a STRUCTURED DEPOSIT and not a STRUCTURED PRODUCT with a sponsor?

Was planning to invest long term, and this seems like a good deal - would be interested to hear views..

Thanks!

Aegis

Bear in mind that when you look at something like this, you can still get up to 5% AER using a standard cash deposit account. This isn't quite as good as the fixed version of the bond you linked to if the FTSE rises, but is considerably better if it falls.

Also note that for the growth option to outperform the fixed option, the FTSE would have to rise to around 6,000, which is by no means guaranteed with the economy still in a fairly fragile state.

coolmercury

Thanks Aegis - point taken.

The Fixed Option offers 35% return after 5 years (if FTSE remains unchanged or is higher). Seems attractive with no plausible scenario of loss of capital (I checked and the product is FSCS protected up to £50k). I would prefer this to a 3rd party structured investment. Any reason I should not?

Cheers.

Reaper

The main risk of the fixed interest option is inflation and interest rates. It sounds good now but maybe it won't if interest rates shoot up over the next 5 years.

For comparision you need to discard the 35% figure and use the AER rate instead which is 6.19%

So you get 5% if the FTSE falls and 6.19% if it does not. That's better than the savings account competition but probably not quite as good as you first thought when you read "35%".

ctdctd

Reaper wrote: »

So you get 5% if the FTSE falls and 6.19% if it does not. That's better than the savings account competition but probably not quite as good as you first thought when you read "35%".

Er, not quite.
You get 5% total if the FTSE falls or 0.98% AER
You get 35% total or 6.19% AER if it rises

Reaper

Thanks, those are indeed the correct figures.

coolmercury

Thanks Reaper and ctdctd.

This is for a portion of my money that I'm willing to park aside and take, perhaps, just a tiny bit more risk with.

35% return (6.19% AER) is appealing - does anyone know of better products out there? This one does appear on the top of the moneyfacts.co.uk best-buy table.

Cheers

cardsharps

coolmercury wrote: »

Was planning to invest long term, and this seems like a good deal -

Yes, I'd highly recommend it. It's utterly spamtastic.

coolmercury

cardsharps wrote: »

Yes, I'd highly recommend it. It's utterly spamtastic.

Sorry, I'm confused. How does a first timer's enquiry qualify as spam??