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Tracker Bonds

What is a Tracker Bond?

Many people ask me what is a Tracker Bond and a Tracker Bond is a savings in either a Life Assurance company or a bank that tracks a certain stock market index with a guarantee of capital and only provide capital growth not interest.   What this means in simple terms is that you can invest in a Tracker Bond and recieve possibly a good return similar to the stock market without risking your capital.  

Tracker Bond chareteristics

  • There is usually a minimum return at maturity with a possibility of a bonus related to performance of various stock market indices or individual shares. 
  • Maximum return may be capped.  
  • Tracker Bonds are subject to market risks as bonus payable at the end of the term is related to growth in stocks or indexes.  If a bonus is not paid, then your capital did not keep with inflation.  
  • The issuer of the tracker bond could default.  
  • Tracker Bonds are for a fixed term 5 years is the usual term.
  • A death exit tax is incurred from the day before the death of the insured. There is no USC or PRSI at this time.
  • If the Tracker Bond is in a Bank deposit product, it is usually subject to DIRT.  Gross interest is liable to PRSI and USC.  
  • Early access to funds prior to the end of the term is subject to penalties. 
  • There are no explicit charges; charges are built into the Tracker Bond structure.  
  • You can invest in a Traker Bond inside our out of your pension and if the Tracker Bond is in a Life Assurance investment, exit tax applies on gains. 

Tracker Bonds are for investors who want to participate in equity markets but with little to no risk.  A Tracker Bond may be for you but it must fit in your overall financial goals.  Make an appointment with us today and see if a Traker Bond is for you.


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