View more on these topics

Comparisons of bonds do not add up

I have been very interested to read the comments of Colin Jackson at Baronworth when comparing the Chartwell AIG extra-income bond, which was launched on September 24, with the Investlife premier income and growth bond, which Baronworth have chosen to promote.

Mr Jackson states: “Chartwell&#39s returns are too low. If you are going to risk capital, it is not worth doing so if the return is under the 10 per cent benchmark.”

The first time I heard Mr Jackson&#39s comments,I assumed that he was being misquoted but this does not appear to be the case.

I accept that the headline rate on the Investlife product is higher than that on the Chartwell product. On the Chartwell product, it is 7.25 per cent (which grosses up to 9.06 per cent), whereas with Investlife, through Baronworth, it is 10.45 per cent. Our quoted rate is a net rate because our bond is based in the UK, whereas theirs is a gross rate because theirs is based in Luxemburg but I do accept that theirs is still the higher.

In terms of the risk, though, there is not a black and white line, with risky products on one side and non-risky on the other.

There are differing levels of risk and any sensible investor or adviser would weigh up the level of this risk with the potential return.

With the Investlife product, the investor&#39s return of capital is linked to eight European investment sectors – banks, healthcare, energy, insurance, food & beverage, auto, chemical and media.

Unfortunately, the capital return is only dependent on the worst-performing of these sectors. The other seven sectors are excluded. I believe that for a £10,000 investment, with annual income being taken, if the worst sector has fallen by 20 per cent, then the investor will receive back only £4,875.

If this happens, I am sure that Mr Jackson can tell his clients that “if you are going to risk capital, it is not worth doing so if the return is under the 10 per cent benchmark.”

Patrick Connolly

Chartwell Investment Management,Bath


LibDems want product firms to fund &#39free&#39 advice by IFAs

The Government and product providers should shoulder the cost of independent financial advice, replacing commission as the primary way of remunerating advisers, say the Liberal Democrats The idea, proposed by LibDem trade and industry spokesman Vincent Cable, would allow consumers to be confident the advice they get is truly independent and would not involve commission […]

Investment workshops target IFAs

Autif and the AITC are teaming up to offer IFAs the chance to improve their inv-estment knowledge through one-day workshops. The Autif/AITC portfolio planning workshops will be held between October 1 and December 13 and then throughout next year starting on April 26 at various UK locations. The workshops are des-igned to improve IFAs&#39 investment […]

FSA relaxes resilience tests

The FSA has relaxed the resilience test rules that require life companies to sell shares to cover liabilities.The rule change is designed to avoid life companies having to sell blue chip stocks following sharp falls in share prices. The move follows a relaxation earlier this month, and follows a week of extreme market volatility. The […]

Review failings costs firm £100k

The PIA has fined IFA EIC Investment Services, of Marchmont House, 83-85 Marlowes, Hemel Hempstead, Hertfordshire, £10,000 for pension review failings. The firm has also been ordered to pay costs of £2,126. A PIA visit in May 1999 identified a series of regulatory failings.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm