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What sort of savings product is it?
The Liontamer Rainbow Index is a capital protected commodities fund.
Who is the company behind it?
The fund is made and marketed by capital protected investment specialists Liontamer, with capital protection provided by Barclays Bank.
Who is the target market?
Investors who want exposure to the booming commodities market. With the capital protection it also appeals to the more cautious investors.
What return does it offer?
The returns are based on the performance of an index which tracks the prices of a basket of commodities.
What other products is it like or is it competing with?
It competes against other capital protected funds. It is also up against other commodities-based investments, but there are few of those available to retail investors in New Zealand.
Is it long, short or medium term?
The Rainbow tracker units have a term of five years and the Booster units four years (plus or minus six months).
What is the unique selling point?
There are a number of unique selling points including the capital protection, the exposure to a basket of commodities, and the booster units which accelerate the returns an investor may get. However, the main new feature is the ‘Rainbow’ or ‘perfect hindsight’ where, at maturity, a 30 per cent weighting is allocated to the three best performers, 10 per cent weighting to the fourth performer and the worst performer is given a zero weighting. This is designed to improve investor returns.
What’s the hitch?
While your downside risk is limited by the capital protection, the upside growth is capped (albeit quite generously).
