ICC investment bank has announced the availability of Global Momentum Certificates, a Merrill Lynch product. These euro-certificates are index tracking securities, which unlike index funds, allow the investor to fully participate in the gains and losses of an index.
The certificates track the Global Momentum Index, which selects 30 large capitalisation stocks from the US, Europe and Asia. The composition is adjusted every two months to contain 30 large stocks with the most improved earnings outlook, or the highest forecasted earnings momentum, according to the research community. There may be no more than 15 stocks from one geographic area.
This product offers 10 per cent capital protection and incurs a 20 per cent Capital Gains Tax liability with indexation.
According to ICC, benefits include a lack of administration costs and investment liquidity meaning investors are not committed to a fixed term.
The drawbacks are that no dividend income arises and the certificates are more expensive than equities, although investors avoid custody costs, says ICC. A minimum investment of £4,000 (€5,078) is required.
