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Money at Work: Liontamer Alternative Energy fund

Friday 12th September 2008

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What is it called and what sort of savings product is it?

The Liontamer Alternative Energy fund is a capital protected fund with a socially responsible theme.

Who is the company behind it?

Liontamer is the leading provider of capital protected funds in New Zealand. Belgium-headquartered bank KBC Asset Management took a 51 per cent stake in the business last year. KBC is the 11th largest bank in Europe and is a major player in the capital protected product market.

Who is the target market?

People who like the idea of investing in wind, solar, hydro, and geothermal energy companies, but who realise that the rapidly growing alternative energy sector is still a bit racy and so want to protect their capital.

What return does it offer?

The fund offers two unit types linked to a basket of 15 global stocks operating in various sectors of the renewable energy industry. Each company has been screened to qualify as a socially responsible investment. There is no fixed return; the investment follows the fortunes of the basket over its five and a half year term. Investors can choose to have either 90 or 100 per cent capital protection.
When was it launched?

August 5.

What other products is it like or is it competing with?

It sits in the international equities box, but is very focussed on one strong theme, alternative energy, a sector where Liontamer see a lot of growth potential. Investing directly in companies involved in this end of the energy market is tricky for most investors, so using a unit trust can be a good way for investors to get a diverse exposure to this industry. No other fund currently in the New Zealand market offers access to this particular theme plus a capital protection feature.

Is it long term, short term or medium term?

Medium, with a five and a half year term.

What is the unique selling point?

As well as providing an exposure to a topical growth industry the fund provides two levels of protection for investor's capital, so it has excellent return prospects for the risk level.

How strong a stomach do you need for it?

The capital protection is backed by Liontamer's parent company KBC, who in turn have an AA- credit rating from Standard and Poor's. The capital protection provides that 'sleep at night' factor, which can be missing from many other equity-linked investments.

What's the hitch?

Downsides include capital being tied up for five and a half years and penalties for early redemptions.

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