Friends Provident has introduced the e-IFA Bond, a with-profits bond that is only available through IFAs via the internet.
The bond invests in the Friends Provident with-profits fund and is aimed at cautious clients who are looking mainly for capital growth. However, income can be provided through a withdrawal option, which is penalty-free. Up to five per cent of the value of the investment can be withdrawn each year, but these withdrawals are subject to a minimum of £250. Investors receive an annual bonus of six per cent and also get a final bonus after three years.
The e-IFA bond draws inspiration from stakeholder pensions in that there is just a single annual management charge of one per cent. Traditional with-profits bonds are not as transparent as this as charges are usually deducted before the bonuses are paid. This means that investors in traditional with-profit bonds have no idea what the charges are.
The with-profits bond may attract interest from investors who do not want to be at the mercy of current stockmarket falls, but the fact that it is only available through the internet may limit its popularity.
According to Standard & Poor's the Friends Provident with-profits fund is ranked 12 out of 27 funds based on £1,000 invested on a bid to bid basis with net income reinvested over three years to March 23, 2001.