Protected Funds News

27.03.2009

What can you do with your savings currently sitting on zero paying % deposit accounts whilst limiting your possible downside exposure to equity markets?

The Dow Jones Industrial Index has risen by 21pc since March 9, just crossing the traditional 20pc threshold that some chart-watchers use to separate a mere rally from the real thing.

The previous Dow rally started after the November 2008 rescue of Citigroup, lasted until the New Year and came a mere 0.8 percentage points short of qualifying as a bull market – before yielding to a 28pc rout.

The current recovery has largely been a vote of confidence in a subsequent US banking system rescue, along with massive government help. Will this upward market movement prove more durable than the last?

Mathematically, it has the advantage of starting from a much lower base. From Thursday’s close, the Dow will have to rise a further 14pc just to match the 2009 high, hit on January 2.

The economic case is less clear. True, after the nationalisation of financial risk through guarantees and money-printing, panic over a possible imminent financial sector collapse looks overdone.

And while GDP in the first quarter of 2009 was substantially lower than in the fourth quarter of 2008, the pace of decline seems to have slowed.

However, investors will continue to tread carefully and will find new launches of Protected Funds with high coupon dividends attractive havens from full market exposure and zero paying deposit accounts.

Morgan Stanley and Nomura are both offering attractive coupon paying notes, 15% and 12.25% respectively with ‘soft’ capital protection provided neither of the main market indexes to which these notes are linked fall by 50% or more from their opening levels when the notes are launched.

Please contact us now if this interests you and you would like more information.

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