# Trackers vs With Profits



## Hatuey (2 Oct 2002)

I never had much time for tracker bonds before. But is it time to reopen the tracker vs with-profits bonds debate in the light of the ongoing controversy over the likely future bonus levels of the latter and a spate of  improved offerings of the former? 
New Ireland in particular seems to be setting the pace (I have no connection!). Their most recent offering, which closes today, the Smart Tracker 6 seems to answer some quibbles re. trackers over five year lock-up of capital and poor participation rates. The Smart Tracker 6 pledges 90pc market participation in return for "only" 95pc capital security. It is also over a 3.5 year period. Is this the way to go with trackers - sacrifice a modicum of security in return for greatly improved growth? And all over a shorter timespan. Other recent tracker bonds from NI had a minimum growth guarantee of 16pc. Am I missing something here or have these trackers at least become a reasonable alternative to with-profits bonds for conservative and/or inexperienced uninvestors? 
To what extent will the process of rebuilding with-profit reserves eat into potential future bonuses? What sort of market participation in the future can investors expect?


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