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Friends reach the Zenith point

Friends Provident International


Type: Unit-linked offshore bond

Aim: Growth and income by investing in a maximum of 10 funds from 31 fund management groups

Minimum investment: £10,000, $15,000, euros 15,000

Fund links: Choice of 95 funds from Aberdeen, AHL, Barclays, Baring Asset Management, Brandeaux, Ciptadana, Circus Capital, Collins Stewart, Dresdner, Fidelity, Friends Provident International, Franklin Templeton, Gartmore, GAM, Glanmore, HSBC, Invesco, Investec, JF, Merrill Lynch, Momentum, Neville James, Nordea, Principal, Sarasin Chiswell, Schroders, Surrenda-link, Thames River Capital, Vanguard, Value Partners

Allocation rates: Investments up to £24,999/$37,499/euros 37,499 – 100%, £25,000-£49,999/$37,500-$74,999/euros 37,500-euros 74,999 – 101%, £50,000-£99,999/$75,000-$149,99/euros 75,000-euros 149,99 – 102%, £100,000-£199,99/$150,000-$299,99/euros 150,000-euros 299,99 – 103% £200,000/£300,000/euros 300,000 and above – 104%

Place of registration: Isle of Man

Switches: Free unlimited switches

Charges: Establishment charge 0.4% a quarter in first five years, annual 1.2%, plus annual 0.1-3.35% depending on external fund links chosen

Commission: Initial 5% or initial 3% plus 0.5% renewal

Tel: 01624 821184

Friends Provident International’s Zenith is an offshore unit-linked bond providing access to 95 fund links from 31 fund management groups.

TBO Corporate Benefit research director Godfrey Bloom regards this as a well presented product which joins the international bond stable. He says: “The product as it stands is a strong contender among its peer group. The charges are in the mainstream for charging structures and the fund selections are adequate. In fact more than adequate with strong property funds and access to gold.”

However, in Bloom’s view offshore bonds have a problem insofar as the underlying charging structure crucifies cautious portfolios. He says: “For example, if the annual management charge is 1.2 per cent and the underlying management charge is 1.5 per cent, the overall charges amount to 2.7 per cent. If the underlying fund is a corporate bond fund this will account for 50 per cent of the running yield. The client would probably buy the product for a mixture of inheritance tax planning and retirement income supplement. If the client draws down 5 per cent tax free, which is the main attraction, a full half of it seems to be going away in charges.”

Instead, Bloom suggests clients with a cautious risk profile could stay with the income gilt fund link, managed by Isis, with an annual management charge of 0.25 per cent. He explains: “This gives an overall structured charge of 1.45 per cent which is just about sustainable. I leave out the establishment charge which pays for advice and is therefore not part of the equation.”

Bloom feels Zenith could face competition from Pan Euro life and Zurich. He concludes: “The staff at Friends Provident International are a cut above the usual on the Isle of Man, which is rapidly gaining the reputation among IFAs as a no hope zone of incompetence.”


Suitability to market: Good
Flexibility: Good
Charges: Average
Adviser remuneration: Average

Overall 8/10


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