KEY POINTS:
What is it called and what sort of savings product is it?
The Liontamer Emerge Series 1 fund is a capital protected fund.
What's the company behind it?
Liontamer is New Zealand's capital protected investment specialist. While it is a boutique firm, last year Belgian bank
KBC, Europe's 10th largest, took a controlling stake in the company.
Who is the target market?
Investors who want an exposure to the growth of emerging markets, but want to protect their capital by limiting potential losses.
What return does it offer?
There is no fixed return. Instead the fund offers two unit types linked to a unique index, which tracks eight key emerging markets via their major share market indices. One of the units has a booster feature that can accelerate gains by 1.2 times. Importantly, while potential gains are unlimited, investors can also choose to have 90 or 100 per cent of their capital protected.
When was it launched?
The fund launched last week and closes on April 17 this year.
What other products is it like or is it competing with?
International share funds, but it differs by providing an exposure to developing markets that are typically difficult to access for Kiwi investors - namely Brazil, Russia, India, China, South Korea, Poland, Hungary and the Czech Republic.
Is it long term, short term or medium term?
The fund has a term of five-and-a-half years and is promoted as a hold-to-maturity type investment.
What's the unique selling point?
It offers investors access to developing markets that have significant growth - and risk - potential, while providing that "sleep at night" factor through capital protection features.
How strong a stomach do you need for it?
The capital protection feature means the risk of your original investment losing value has been greatly reduced, while the potential returns have been enhanced through the booster feature. For an international equity fund the risk is pretty low.
What's the hitch?
Over the term of the fund, if the index does not rise - unlikely but possible - inflation will have eaten away at the investment's real value. That seems a small trade-off for capital protection.
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