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84% of IFAs put faith in with-profits bonds

An overwhelming 84 per cent of IFAs believe with-profits bonds have

outperformed inv-estor expectations over the past 10 years, according to

research from Prudential.

IFAs say with-profits bonds are not outdated and irrelevant, as they are

often portrayed by consumer groups, but are becoming an important

investment option in times of stockmarket volatility and falling interest

rates.

The survey of 250 IFAs, carried out by independent research company PTM,

found that half of the advisers questioned had recommen-ded a with-profits

bond in the past fortnight and 30 per cent had done so within the past

three months.

More than two-thirds of advisers questioned – or 69 per cent – believe

criticism of with-profits bonds over the past six months has not been

justified but they suggest that more transparent contracts would improve

their popularity in the future.

The majority of those questioned, 82 per cent, said with-profits bonds

remain relevant today and 76 per cent of advisers said the bonds should be

part of most balanced investment portfolios.

Forty-one per cent of IFAs believe with-profits bonds have become more

relevant over the past decade, largely as a result of declining returns on

cash-based savings acc-ounts and greater stockmarket volatility.

Eighty-eight per cent of advisers believe that with-profits bonds are an

appropriate investment vehicle for long-term nest egg savings and 78 per

cent said they are effective when planning for retirement.

A third of those questioned would consider recommending with-profits bonds

as a way to save for university fees.

Prudential strategy marketing manager Campbell Boyd says: “From the

results of the survey, it is clear that with-profits bonds remain an

important part of the investment landscape in the 21st Century, helping to

ach-ieve a proper balance of risk and reward in most individual portfolios.”

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