There are a number of pooled investment vehicles available to those who don't want the bother of investing directly in property or shares, but want a better return than that offered by a term deposit or An Post savings certificates.

The names of such products, many of them acronyms, may be off-putting but most are simply variations on the familiar theme of risk and reward. For those with a lump sum to invest, there are three main types of pooled investment product - tracker bonds, unitlinked funds and with-profit bonds. All provide exposure to equity markets but with various degrees of risk attached.

There are a range of other products including personal investment (PIPs) and personal equity plans (PEPs) on offer for those who don't have a "nest-egg" to invest but can afford to put away a regular sum each month.

Tracker Bonds

Tracker bonds were launched here in the early 1990s and have proved enormously popular with Irish investors in recent years, as they provided exposure to booming stock markets without the usual risk to capital. The best performing delivered returns of 70 per cent upward after tax as share prices around the world rallied through the mid-1990s.

As their name suggests, the bonds track the performance of stock market indices around the globe. Some follow just one index such as the FTSE index of leading British shares, while others track a number of stock market indices whose performance dictates the bond's return.

They appeal in particular to the more cautious investor because the capital sum invested is either fully or partly guaranteed - meaning no matter how far the markets fall, you will not lose all the money you put in. Most tracker bonds require a minimum investment of between £2,000 and £5,000 and the term is usually five or six years, although shorter terms are available.

However, tracker bonds have declined in popularity of late, partly because low interest rates have driven up the cost of pricing such products. Also, the downturn in stock markets is set to hit returns while tracking indices rather than investing in shares means investors do not benefit from dividend income.

As a result, the number of trackers on offer in the Irish market has shrunk from an average of 14 at the height of their popularity to just three at present. Ulster Bank, AIB and Liberty Asset Management in conjunction with Anglo Irish Bank are the three institutions currently offering trackers, according to Mr Conor Murphy, director of National Deposit Brokers, which runs a tracker bond information service.

Financial advisers say the Ulster Bank bond in particular is attractive to those who are prepared to take some risk. It offers a 90 per cent capital guarantee, tracks the ISEQ index of Irish shares and is taxed at just 10 per cent because it is invested in Irish equities.

Unit Funds

In the US, up to 50 per cent of people have an interest in the stock market, the bulk of them through mutual funds. But financial advisers estimate that less than 1 per cent of people here invest in the Irish equivalent - unit funds.

Investors buy units in a fund which is managed by a professional fund manager and the value of their investment rises or falls depending on the performance of the underlying assets.

Such funds generally fall into three categories - low-risk funds which are mostly invested in secure assets such as cash and gilts, balanced or medium-risk funds which invest in a wide range of assets both at home and overseas and high-risk funds which are tied up in a single asset class such as equities or in a single region such as Ireland.

A popular low-risk fund at the moment is that offered by GA Life which guarantees the original investment after five years. Unlike many low-risk funds, however, it is 60 per cent invested in Irish equities so it has the potential to generate a better return than funds simply invested in cash. Generally, however, unit funds are not accompanied by a capital guarantee, so the investor can end up with less money than he started out with, although in most cases a gain can be expected.

Most institutions offer a managed growth fund which will be invested in a mix of the four basic asset classes: cash, property, bonds and shares. Such products can deliver very high returns during periods when stock markets are booming but when markets turn down, their performance suffers.

Currently, the average year-to-date return from Irish managed growth funds is just 1.45 per cent compared to 16 per cent in April. But the average return over the last five years remains a credible 61 per cent and it is the long-term performance of such investments which counts.

Investors in unit funds can check how their fund is performing in the newspapers each week and should also be aware that they can switch out of one fund into another offered by the same institution for a small charge, usually around £20.

With-profit Funds

Available only from life assurance companies, with-profit funds are described as "a man for all seasons" type product by Mr Owen Morton, managing director of Moneywise Financial Planning.

"They can hike the yield on the safer segment of an investment portfolio by as much as one third without a corresponding hike in risk exposure," he says.

With-profit funds, as the name suggests, offer a return to investors based on the profits made by the institution with which they are invested. They are suitable for both lump sum investors and regular savers.

The former invest in a with-profit bond which is then invested in a fund, while regular savers can put their monthly sum into a with-profits policy which also goes into the fund.

Like the managed growth fund, the with-profits fund is invested in a mix of equities, gilts and cash. But unlike most unit funds, the investor's capital is guaranteed. With-profit funds also differ because they smooth out the returns from the underlying investment - they hold back some of the profits in the good times to maintain payouts when markets are doing badly. With-profit funds pay out an annual bonus, currently around 6.5 per cent, while they also pay out a terminal bonus at the end of the investment term which is usually at least 10 years. These products are particularly suitable for those who want an income from their investment as up to 6 per cent of the annual bonus can be drawn down for income with no tax liability.

The six players in this market are Canada Life, Equitable Life, Friends First, GA Life, Norwich Union and Scottish Provident which is currently closed to lump-sum with-profit investment. Investors should beware, however, that early encashment of their with-profit investment can result in a significant surrender penalty.

PIPs and PEPs

Personal investment plans (PIPs) and personal equity plans (PEPs) are two sides of the same coin. Both are aimed at the regular investor, both are long-term investments of at least five years but they are invested in different ways and taxed differently.

PIPs are invested in managed unit funds with the usual mix of cash, gilts, property and shares and are taxed at 24 per cent, while PEPs are more focused on equities. PEP's qualify for a special 10 per cent tax rate, provided at least 55 per cent of the funds are invested in Irish equities. Of this amount, 10 per cent must be invested in smaller Irish companies with a market valuation of less than £200 million.

The maximum investment in a PEP is also limited to £75,000 for an individual and £150,000 for a married couple, depending on the amount held in a Special Savings Account (SSA).

SSAs, SIAs and SPIAs

These special savings and investment products were set up under the 1993 Finance Act. Special Savings Accounts (SSAs), deposit accounts in which individuals can save up to £50,000 with interest taxed at 20 per cent, are the best known.

Special Investment Accounts (SIAs) and Special Investment Schemes (SISs) are part of the same family as the PEP. They are similar to unit funds but also qualify for the reduced 10 per cent tax rate subject to the same conditions as the PEP.

SISs, such as Bank of Ireland Asset Management's Eiri product, are offered by investment management firms while SIAs are available from life companies such as Ark Life and Irish Life and include life cover as part of the investment.

Another related product is the Special Portfolio Investment Account (SPIAs) which also qualifies for 10 per cent tax provided it meets the Irish equity investment criteria. However, SPIAs can only be set up through a stockbroker for the direct purchase of shares.