HSBC FTSE100 Guaranteed Tracker

conman_3

HSBC have a Guaranteed FTSE tracker where you do not lose your investment (min £3k), you keep it there for 5 years and get 115% of any rise. Looks good I would think, but has some method of calculating the rise by averaging the index in the last year, so you would suffer from any big variation in the index in the final year.
Can you lose ??

dunstonh

No dividend income from the FTSE and the 115% is lower than what is achievable from other providers. I was sent an email from a insurance co rep about their 125% version.

Most of these have averaging in the final year. It can protect your gains but it does also reduce the potential. Personally, i prefer the lock in versions that are available. These often have a lower participation rate but will lock-in once they go above a certain growth point and that then becomes the minimum maturity value.

lipidicman

The killer will be the tax - it will be subject to income tax. Real share trackers would be tax free to most as they would be subject to capital gains tax which is rarely used by most people who look at these guaranteed trackers

yorkshire_ria

Most plans which have 'guaranteed' in the account name are subject to income tax. Barclays & Woolwich have capital protected FTSE plans where the rise is subject to capital gains. Even though you benefit from 100% rise in the FTSE, the favourable tax treatment means you could earn more!

Unless you expect to use your CGT allowance in the year it matures, this means any gains will be tax free. Alternatively, you can also wrap it in an ISA to make 100% sure. If you've used this years allowance, there'll soon be next years.

lipidicman

yorkshire_ria wrote:

Barclays & Woolwich have capital protected FTSE plans where the rise is subject to capital gains. Even though you benefit from 100% rise in the FTSE, the favourable tax treatment means you could earn more!

These might be good - care to elaborate? I couldnt find them on barclays website!

dunstonh

Woolwich now have a 130% participation rate. The Plan also incorporates a Potential Early maturity feature that will return 30% of any percentage rise in the FTSE 100 Index after 3 years, if the Index has risen by 30% or more at the half way point. Closes: 29 April 2005. Its available within an ISA or direct investment.

Its on the woolwich IFA website. Don't know if its available direct.

lipidicman

Should I read that as 130% of the rise of the FTSE?

Does the ISA qualify as a stocks and shares mini cash ISA, or CGT if you dont put it in an ISA? If these are both true I am interested and I hope I can get one without an IFA

dunstonh

Yes, it is 130% of the FTSE.

Mini and Maxi ISAs. Mini ISA, Maxi ISA and PEP transfers. Direct Investments, Corporates, trusts and charities (assuming they are set up as a company or a trust). SIPP and SSAS Investments.

This one is a 6 year version. Copy and paste of details below:

This is a straightforward growth investment, designed to give investors 100% capital repayment after 6 years

PLUS: 130% of any growth in the FTSE 100 Index.

When the Plan is opened, investors should choose whether they would like the opportunity for the Plan to mature after only 3 years. If they select this option and the Index has risen by 30% or more at the half way point of the Plan (ie. the closing level of the Index on 29 April 2008) the Plan will mature early and investors will receive:

100% capital repayment

PLUS: 30% of any percentage rise in the FTSE 100 Index. If the Index has not achieved 30% growth at this point, the Plan will continue to the end of its 6-year term and investors will receive 100% capital return plus 130% of any Index growth. It is optional whether investors select this feature.

Opens: 28 February 2005
Closes: 29 April 2005
Last Transfers: 15 April 2005

This particular version does appear to be only geared through IFA distribution. If you cant find a discount IFA near you, I can always do an execution only basis transaction with you and split the commission. There appears to be no rebate method on the plan or enhancement by taking nil commission. So refund of commission after it is paid is the only basis.

There are factsheets and brochures available which i can email to you if you want.

lipidicman

I'll PM you my email - you dont clarify whether this attracts income or CGT, and if it goes in a S&S rather than a minicash ISA

dunstonh

Sorry, i wrote that out then overwrote it with a copy and paste

It is classed as stocks and shares ISA. Obviously no CGT/Income tax worries inside an ISA. Direct investment would have a potential CGT liability.

There is another flavour:

100% capital repayment plus a minimum return of 24% at maturity. Its the more cautious version.

lipidicman

100% capital repayment and 24% minimum - but what ratio of the FTSE (100%)?

I am still quite interested!