Does the Prize Bond Company know the difference between a game of chance and an investment? It would seem not, judging by its latest announcement showing how half-yearly sales are up by 38 per cent on the same period last year.

"Intelligent Money Backs Attractive Investment Option in Low Interest Rate Climate," says the latest sales report. Prize Bonds are no longer simply bought, they are being "invested" in, and according to the Prize Bonds chairman, Mr Michael O'Keeffe, the "unprecedented" £17.9 million sales in the first half of the year "show a continuing move by investors towards Prize Bonds". He cited the "current low-interest-rate environment" as a contributing factor as to why "smart money is moving to Prize Bonds and the chance to win anything up to £100,000".

The Prize Bonds Company marketing manager, Mr Brendan Moran, also claimed that: "Basically, people include Prize Bonds in their investment portfolio for two main reasons. Firstly, their money is safe and secondly, they can win tax-free cash prizes that are completely confidential."

When Family Money asked Mr Moran what the annual return from a Prize Bonds "investment" of £1,000 was, he said it was 3.5 per cent, based on the numbers of prizes and winners. He qualified that by saying it was a "potential" return. "You can win anything between zero and £100,000 a year."

Family Money drew blank stares and perplexed silence when we asked a number of well-known investment advisers, licensed and regulated under the Investment Intermediary Act how many of their investment clients were moving their "smart money" to Prize Bonds or including Prize Bonds in their investment portfolios.

"Umm. None that I know of," said Mr John Crowe, the head of KPMG's personal financial services division, one of the biggest in the State. "Prize Bonds don't give any return, do they? My understanding is that if your number comes up, you win a prize. Have I missed something? All the smart money I know is moving into with-profit bonds these days. The Prize Bonds people might as well be claiming that all the `smart' money is moving into Lotto tickets."

National Deposit Brokers director, Mr Douglas Farrell and Mr Mark Cunningham of Bank of Ireland Asset Management, who is also the author of the investment guide Investing for Life, both said they do not include Prize Bonds in their portfolio recommendations.

"Prize bonds are a flutter, but they are not a serious place to put your funds," says Mr Farrell. "The majority of our clients have a portfolio of assets weighted in equities, property, gilts and ready money in deposits. I once knew someone with £30,000 in Prize Bonds and over many years he won £100 here and £1,000 there and thought this was a good return. All I could do was shake my head and walk away. There was no point in even trying to argue with him."

For Mr Cunningham: "Prize Bonds are no more than the Lottery, except of course that you do get your money back. Clearly they are not an `investment'. If you want to have a flutter, you should invest 95-99 per cent of your funds in a balanced portfolio and then have a punt on the horses, a high risk stock or Prize Bonds - just for the fun of it."

This shift in marketing - from Prize Bonds being a safer game of chance in which you can get your money back - to somehow being a sensible investment choice has been criticised by the Consumers' Association of Ireland.

A spokesman said: "There is an onus of responsibility for product manufacturers as well as intermediaries under the Investment Intermediary Act to come up with legitimate investment products. For the Prize Bond company to describe Prize Bonds as an investment is grossly misleading to consumers. What's next? The Curragh racecourse advertising the Budweiser Derby as an attractive investment option? Actually, you have a much better chance of winning on the Derby than you do with Prize Bonds."

Unfortunately, in this case, An Post (and its subsidiaries of which the Prize Bonds Company is one) can advertise anything it wants, the humble stamp included, as an "investment" since it is exempt from the terms of the Investment Intermediary Act. Its Prize Bonds intermediaries - the banks, An Post itself, building societies, stock brokers - must be licensed by the Central Bank, which regulates companies under the Act, so it seems that they are not breaking any rules either by promoting Prize Bonds as "investments".

Nearly £18 million in sales - and £4 million of that sold in May alone - is impressive for a single product, says Mr Cunningham. But the fact that May is the big month for First Communions and Confirmations suggests to him, at least, that Prize Bonds are still a one-off purchase.