From The Sunday Times
Written by Philip Scott

June 10, 2007

All-weather schemes
If the market uncertainty continues, expect to see schemes launched that seem to offer the best of all worlds: the chance to make money if the market rises or falls, plus full capital protection.
One fund promising this is the Bull and Bear Tracker Plan 2, a six-year plan being launched by boutique fund manager Arc Capital & Income next Friday. It will use complex financial instruments called derivatives which enable you to make money even in falling markets.
Investors will receive 100% of any growth in the FTSE 100 index over the six years or a return of 1% for every 1% the index falls provided this is not by more than 50%. If you invested £10,000 and the Footsie grew or fell 50% over the six-year term you would get back £15,000.
If the index falls by more than 50% and the index finishes lower than it started you don’t make any profit, although your original capital is safe. However, this guarantee only applies if you stay in the scheme for the full six years. Leave during the six-year term and you are likely to get back less than you put in.

Justin Modray of Bestinvest, an adviser, said: “The return in the final 12 months will be averaged over the year, so if the FTSE 100 is up you would be better off investing in a Footsie tracker fund.”