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Ecclesiastical offers alternative route to life fund

Ecclesiatical Insurance Group is targeting its with-profits bond at older investors with a lump sum of £5,000 to invest.

The bond has been established as an alternative route into the Ecclesiatical Life Fund, which consists of UK shares, fixed interest securities and other investments.

Before the introduction of the with-profits bond, investors could only access the life fund through the Ecclesiatical endowment, which does not allow lump sum investments to be made.

Investors will receive an annual bonus, but the bonus rate will not be known until early next year, when Ecclesiastical will have an idea of how the underlying fund has performed.

With-profits bonds are often seen as a stepping stone to stockmarket investments for cautious investors who are used to building society accounts. Investors are protected from sharp fluctuations in the stockmarket by smoothing, which evens out exceptional highs and lows over a period of time.

The with-profits bond could attract investors who are looking for income to supplement a pension. But it could face competition from guaranteed bonds which can be linked to the average performance of various stockmarket indices over a defined term.

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