This time the product is the venture capital trust - but like technology funds, precipice bonds and zero dividend preference shares before them, they are attracting investors who cannot afford to have their fingers burnt.
On the surface, venture capital trusts (VCTs) look like a win- win situation, offering 40pc tax relief on the investment plus tax- free growth and income so long as the shares are held for at least three years. VCTs raise a few million pounds by issuing shares to investors and put the money into fledgling businesses. Shareholders share the profits and the losses.
But there's more than one sting in the tail and the unwary investor could easily be hurt. These are very high-risk schemes, yet some VCTs allow minimum investments of just Pounds 1,000, which is bound to attract some people who cannot afford to lose money.
City watchdog the Financial Services Authority has become concerned that small investors could be tempted by the tax breaks and lock up money they can ill afford to lose.
VCTs have a number of key problems that should persuade small investors to steer clear: YOU must leave your money in them for three years for the tax break to stay intact - but most experts suggest you should really expect to leave your money for ten years.
THEIR shares can be very difficult to trade and most, if they can be sold, go for 15pc to 30pc less than the value of the assets they hold.
THE tax relief only applies on the initial purchase of the shares - so if you want to sell them the buyer won't get tax relief, which undermines their value.
SOME VCTs are being set up by companies with no experience of this style of investment.
WHILE some offer to buy your shares back at a small discount which would give you around 88pc of their true value, this guarantee is only as strong as the company which makes it - and some VCTs are being launched by potentially here-today-gonetomorrow companies.
Ben Yearsley, of independent financial adviser Hargreaves Lansdown, has scrutinised 45 VCTs launched this year. He says: 'There are ten to 15 I would not touch with a bargepole. Only a quarter to a third of them are worthwhile investments.
'I have suggested to these trusts that the minimum investment should be Pounds 5,000, but some are as low as Pounds 1,000.
These are long-term investments of at least seven to ten years and people who cannot afford to tie their money up that long should not buy purely on the back of a tax break.' The FSA is publishing warning guidelines on its internet site at www.fsa.gov.uk. It is also contacting financial advisers to make sure they are following the rules on advised sales and it is checking the activities of those launching VCTs.
Specifically it is looking at direct mail being sent to people, to check it highlights the risks prominently enough, and checking that they are targeting the right type of investor - that is those wealthy enough to consider VCTs.
It will also be looking at material sent to IFAs and press advertising.
"FSA spokesman Rob McIvor says: 'If they are targeting people with Pounds 250,000 of liquid assets that is one thing, but if they are sending material to small investors that is another thing entirely.
'VCTs are supposed to have 70pc of their money in what the Inland Revenue calls qualifying investments - these are usually start-up or fledgling ventures.
'The other 30 pc was generally put into something much less risky such as cash or bonds, but we are now seeing VCTs putting this into areas such as emerging markets or derivatives, which is pushing up the risk levels enormously.' The message is clear. By all means invest in VCTs if you can afford to lose all or most of the money if things go wrong.
But make sure you read all of the material carefully and understand fully what you are getting into. If in any doubt, go to an independent financial adviser and pay them to advise you.
t.hazell@dailymail.co.uk
