Investment Portfolio Bond
Type: Unit linked bond.
Aim: Growth or income by investing in a choice of four portfolio's,
cautious, balanced, managed, ethical or a choice of 10 out of 16 unit
Minimum investment: £5,000.
Fund links: Managed, property, investment trust portfolio, UK index
tracking, Index linked, Pacific basin, stewardship managed, fund of
funds, overseas equity, UK equity, fixed interest, North American,
stewardship, cash, European, with-profits fund (series 14).
Allocation rates: £5,000-£9,999 – 100 per cent, £10,000-£19,999 –
101 per cent, £20,000-£99,999 – 101.75 per cent, £100,000 plus –
102.25 per cent.
Charges: Annual up to 1.25 per cent.
Switches: 12 free switches a year, £15 thereafter.
Special offer: Extra 2 per cent allocation on amount invested.
Offer period: Until November 9, 2001.
Commission: Initial 5 per cent.
Tel: 0845 7573036.
Company's reputation 6.7
Past performance 6.3
Product literature 7.3
The investment portfolio bond from Friends Provident is a unit linked
bon d that offers investors a choice of four portfolios. It also offers
direct investment into up to 10 out of a total of 16 unit-linked funds.
Looking at how the bond fits into the market, Harford says: “Along
with many of its competitors, it fits quite well into the market.”
Woodward says: “There are a number of similar offerings on the
market by the larger insurance companies.” Cox agrees. He says: “I
feel that this is only an alternative to some of the existing providers.”
Moving on to the type of client that the bond is suitable for, Woodward
says: “This is for clients who are looking for their investments within a
single premium investment bond, rather than directly into unit or
Cox says: “I think the typical client for this product would be retired or
approaching retirement and requiring income.”
Harford says: “The bond is suitable for any client who requires a
diverse spread of investments over the medium to long-term. It can
be used for either income or growth.”
The panel is negative about the types of marketing opportunities the
plan will provide. Harford thinks that this is one of many such
products, while Cox says: “There are no marketing opportunities in
addition to those that already exist. The bond is probably of more use
to Friends Provident's direct sales force.”
Woodward says: “There are not many opportunities for our company.
There are a lot of similar competing products out there. The two per
cent extra allocation for a short period will not make much of a
difference in the current market.”
Examining the strong points of the product, Cox says: “Good points
include the fund choice and the strategy choice. The share exchange
could be useful, while the extra allocation could be very useful for
small investments. The fund of external fund managers could be of
interest to some investors.”
Woodward says: “For advisers who want more than just the
traditional fund management approach, the multi-manager concept
may well be a real plus. I just wonder though if they will be aware that
comparatively recently the manager who used to run Friends
Provident's multi-manager offering on the unit trust side has left to
Harford says: “The good points include the fact that it spreads the risk
about, it includes a with-profits fund and also has the option for
Turning to the drawbacks of the bond, Woodward says: “I think that
this is an okay product, but there are a lot of similar offerings out
there and there is not much that distinguishes it from the competition.
In the end it will be about the investment performance of Friends
Provident, which from time to time has been quite good and at other
times has been below average.”
Harford thinks that the only disadvantage is the fact that it invests in a
very competitive market place, while Cox points to the ongoing
Looking at the flexibility of the bond, Cox says: “There is a degree of
investment flexibility, but the plan does not offer anything more than
what is available from other providers.”
Harford says: “The flexibility is consistent with products provided by
other providers,” while Woodward says: “It's not bad. It has a slightly
different choice of fund links and it allows higher rates of withdrawals
than a lot of other companies.”
Evaluating the reputation of Friends Provident, Harford says: “It has a
good reputation, so there is no reason not to consider the product.”
Woodward says: “Friends Provident has built a good reputation for
with-profits and also with its stewardship fund. It has also built a
solid reputation with its venture capital trusts and clearly it has good
skills in some areas of stockpicking.”
Cox adds: “Its reputation is average but its service is improving.”
Examining its investment past performance record, Woodward says:
“Its record with with-profits funds is pretty good although with some of
its equity funds it is not so good, as some of its funds have third
Cox says: “Its past performance record is nothing special, but its
stewardship product has been a reasonable fund in the past.”
Harford says: “Friends Provident has both some good performing
and some average performing funds.”
Identifying the main competition that the bond will face, Cox says:
“Competition will come from products from Norwich Union, Clerical
Medical, Standard Life and NPI.”
Woodward says: “Norwich Union, Sun Life and Prudential all transact
a great volume of single premium bond business.”
Harford is more specific. He says: “Competition will come from the
Norwich Union portfolio bond, the Clerical Medical flexible bond and
the Scottish Widows flexible bond.”
Looking at the charges, Woodward and Harford both think that these
are standard for this type of product.
Addressing the commission, Harford again thinks that this is
standard. Woodward says: “It is fair remuneration, although at some
point I feel that commissions will need to reduce to come in line with
Taking a look at the product literature the panel is positive. Cox says:
“I think that it is good, both clear and easy to follow.”
Harford says: “The literature is very good and is client friendly.”
Woodward adds: “The literature is quite good. It does not have too
much detail and so it is easy to follow for retail investors.”
Finally Cox says: “I tend to think that this product is designed more for
Friends Provident's direct sales force rather than the IFA community.
When the additional 2 per cent allocation stops then the product has
very little to offer.”
Eric Woodward, Managing director, EP Ward Investment Services,
Brandon Harford, IFA, Howell Shone IFAs, Peter Cox, Principal,
James Tate IFC.