Sunday Star Times talks Global brands sharemarket
Financial product article: 2 July 2006
Product: Global Series 2
Offeror: Liontamer
Offer dates: The fund is open now. There are two classes of units for investors. The official close dates for the sale of the last “booster” units is July 28 and August 11 for the “super booster” units. That’s flexible, and could change if Liontamer deems it necessary.
How it works: Liontamer specialises in equity-linked investments with capital protection, giving an option to investors who need growth, but can’t face the risk of sharemarkets. The returns for Global Series 2 will be linked to the fate of a concentrated basket of 10 shares: Canon, Citigroup, DaimlerChrysler, L’Oréal, Nestlé, PepsiCo, Proctor & Gamble, SAP, Siemens and Toyota. The booster units have a five-year term and 100% capital protection if markets turn nasty. The super booster units offer 90% capital protection. The difference is the financial engineering behind the booster units could return up to 120% of the growth (1.2 times the rise in capital value) of the underlying shares, while super booster units could return 150%. Investors will get their returns early if growth is spectacular enough.
What we like: These are big brands able to tap into the faster-growing markets for the super-wealthy, those in Asia and the emerging world. If growth is moving from the West to the East, these are companies well-placed to benefit from it.
What we don’t like: The booster feature is not yet locked in and will be set at the end of the offer period. Booster units are aiming for 120% participation. Super booster units are aiming for 150% participation. That means what’s promised now may not be what you get.
Conclusion: Liontamer has a lot of happy investors, but its products are not the panacea for all market woes, and it comes with a cost – 3% of money invested.Correction: please note the closing dates are 28 July for Super-Booster units and 11 August for Booster units. These were described in reverse in the article.
Comment: As the article in the Sunday Star Times points out, the booster for each fund is not yet locked in. There are however minimum values for each type of unit (105% for booster units and 130% for super-booster). We could have simply offered these minimum terms, but by waiting until investor subscriptions are received, we are aiming to lock in a much better level of booster for investors. The levels we would like to achieve are; 120% for booster units and 150% for super-booster units. At the time of launching the fund, market pricing was a little higher than these levels.
