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Derivatives

Agriculture Next Up For Investment Products

Ulster Bank and Barclays Capital have launched investment notes linked to agriculture stocks and an index, respectively.

Ulster Bank and Barclays Capital have launched investment notes linked to agriculture stocks and an index, respectively. The underlying is a new one for U.K. investors. Alex Robinson, head of wealth distribution at Barclays, explained it is a natural follow on from the trend for commodity-linked investments over the last two years (DW, 10/1/04). Although the GSCI Agriculture index the note references has been going down since the 1970s, Robinson said there are fund managers who believe increasing demand for sugar for ethanol-powered vehicles, as well as climate change and China's urban population growth, could spark a turnaround.

The five-year Ulster Bank Farming Growth Bond is targeted at farmers and splits investment between agriculture stocks, a managed property fund and the CECEEUR index, referencing Czech, Hungarian and Polish equity. Paul McGarrity, responsible for marketing at Ulster Bank, did not have any details on the pricing or structuring of the note. Robinson said its five-year GBP GSCI Agriculture Note offers 120% participation and is structured with a down and in put which limits capital protection if the index falls by more than 40%. "If it catches people's imagination, this could shoot the lights out," he noted, adding the note has no minimum investment barrier and is targeted at fund managers and high-net-worth clients.

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