Globe and Mail columnist Rob Carrick has recently been pounding the table on the poor investment merit of principal-protected notes (PPNs). In his column in last Saturday’s Report on Business (A Do-it Yourself Principal Protection Plan), Rob reiterates his concerns about PPNs (high, invisible fees; hazy explanations of underlying investments; protection on investments that don’t need protection; lack of a guaranteed return) and provides some do-it-yourself alternatives.
It’s great to see Rob voicing his concerns, but unfortunately the products keep flying off the shelf. The sales effort continues unabated.
If someone tells you that you can participate in the equity or commodity markets without any risk, remember the old adage. If it sounds too good to be true, it is.