IS it a bomber, is it a Calvin Klein scent, is it a record label? No, it's Barclays new trend-setting financial happening with the attention-grabbing name b2, writes Simon Bain.
A ''guess what it is'' advertising campaign has just been launched, though the actual product won't be available until a week on Monday. So, apart from an attempt to spice up Barclays' image and hit back at the new banks, what is it?
It is a financial company which claims a ''new approach to savings'' aimed at go-getting aware consumers. Its first product is the Advanced Savings Account, which is also a personal equity plan, which is also a stock market protection or guarantee fund. And it is positioned to qualify for individual savings account (Isa) tax relief next year.
You pay in upwards of #50-a-month or lump sums of #500, and lock in for three, five or seven years. If share prices fall, your capital is guaranteed to be returned. If the market goes up, you get the upside, including
the dividends.
The catch is that 14% of your savings are used to buy the
guarantee, so that only 86% of your money will reap any market rewards. And the Pep charges include a 0.9% initial fee (commission on every payment) plus annual charges of 1.5% of your money.
The innovation is that you can withdraw funds at any time within the chosen period - but then the capital guarantee is
limited to 85%.
The cost of the guarantee is such that over three years, stock market growth of approaching 50% would be needed for returns to outpace the top-paying investment bonds.
For comparison, Scottish Life International's Protected Deposit Bonus 100 fund, with 100% protection like b2, has risen by 9.7% in the last nine months - one-third of the rise in the FTSE-100 index. But SLI promises to pay bonuses each quarter when neither the UK nor the US markets fall, which locks in some gains.
Scottish Mutual, which pioneered controlled risk funds and has a good record, says the way b2 provides its guarantees is ''expensive''.
With the FTSE-100 at its present high level, a three-year bet looks dangerous. Locking in for five or seven-year periods ought to provide returns. But if you are ready to wait that long anyway, why take reduced gains at a time of someone else's choosing?
RATING *
*** Worth considering
** Shop around
* Hype alert
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