Tracker bond design and sales are driven by marketing departments and, as a result, positive returns will be promoted to the hilt, while we may never get to hear about poor results.

Other providers we spoke to claimed that their tracker bonds were better. However, by the time we went to press, only one, New Ireland, had provided a detailed list of how its own trackers had fared.

Needless to say, given its unique enthusiasm to share the data with us, all four of its bonds that matured in the past three years - Smart Trackers 4,6,7 and 8 - did well, with annualised returns of 7.8%, 13.4%, 9.1% and 4.8% respectively.

"Our position on tracker bonds in general is positive, " said a spokeswoman for New Ireland. "We believe that guaranteed products have a real role to play in the market. They offer distinct advantages over other equity investments in that most offer some sort of a capital guarantee.

"Even though there is a price to pay when investing in a guaranteed product, it is a price that many people are quite happy to pay. It is also worth bearing in mind that many investors aren't comparing guaranteed funds with higher-risk, non-guaranteed funds, they're comparing them with deposit-based savings accounts and are trying to get a better return without taking much risk, " she said.

Tracker bonds should not be confused with index tracking funds, which are managed funds that buy real shares representative of the market. Also, not all tracker bonds are the same: some offer better terms than others.

If you do decide to invest in a tracker bond, watch out for low participation rates in stock market growth or low caps on potential returns. Some seem to promise the sun, moon and stars - such as quadruple growth - but the small print can reveal a less impressive prospect for returns.

btyson@tribune. ie

How a selection of First Active tracker bonds performed Tracker Deposit a/c Managed fund mature date period return return* return** Secure Global Bond Series 1 Op 1 12.12.2003 3 years 0.00% 16.00% -15.76% Tracker Bond Series 3 Op 2 16.12.2003 5 years 0.00% 21.67% 5.62% Tracker Bond Series 4 Op 2 15.09.2004 5 years - 10% 17.85% 7.10% Secure Global Bond Series 1 Op 2 12.12.2005 5 years 0.00% 29.50% 14.80% Secure Sector Bond Series 1 06.06.2006 5 years 0.00% 27% 16.37% Secure Sector Bond Series 2 31.08.2006 5 years 0.00% 27.25% 28.84% *First Active fixed term account **Average return over period, all funds