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Julian Gibbs

With Standard Life&#39s entry into the with-profits bond market, all the major life companies are now issuing these bonds.

Standard Life is being typically cautious in that

it is only offering an initial reversionary bonus of 4.5 per cent with a terminal bonus from day two which is, as yet, of unknown quantity. Furthermore, it is stating that, while there are no early surrender penalties, it reserves the right to apply what other companies call the market value adjustment factor on early encashment.

Of course, the company must apply an MVAF as, after paying commission, it would be well out of pocket if it did not.

To my mind, it is a pity insurance companies are not more open about the investment performance of their with-profits funds, at least over a period of five years or more, as it would then be easier

for IFAs to select them sensibly on behalf of

their clients.

Regarding the question of financial strength, I prefer companies with a high free-asset ratio or those which are subsidiaries of major companies, where the free-asset ratio is of little significance.

On all the evidence

I have so far seen, the companies I like best are Liverpool Victoria, Prudential, Scottish Mutual, Scottish Equitable and Scottish Widows for income and growth investors, while for growth

only I like Standard Life and Britannic.

With-profits bonds are still the ideal investment for elderly and conservative investors and are likely to continue to show much better returns than fixed-interest investments, other than some high-yield corporate bond Isas and some zeros.

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