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Liverpool Vic offers triple choice with WP bond

Liverpool Victoria is revamping its with-profits product range to offer a bond with a range of asset-allocation models and the option of a five-year capital guarantee.

Investors in the All-in-1 investment bond can choose between growth, balanced or cautious strategies, with the option of a five-year guarantee which is charged to the fund’s annual fee.

Investments in the new bond will go into the 4.7bn Liverpool Victoria with-profits fund rather than into separate ring-fenced pots.

Returns will be worked out by a hypothecated method, which matches the returns from the asset mix according to which asset-allocation strategy is chosen.

Although the mutual hopes that the new product will boost with-profits sales, it does not expect the underlying with-profits fund’s asset allocation to be affec- ted, even if clients opt overwhelmingly for one strategy ahead of the others.

The capital guarantee runs over five years and pledges to return 100 per cent of the original investment less any withdrawals.

The unit price is given as an average price based on the last 26 weeks’ price movement to smooth short-term volatility. However, if the value of the underlying investments falls to 20 per cent or more of the averaged price, investors cashing in the bond will get the underlying investment return less any encashment charge. Encashment charges start at 5 per cent in year one falling by 1 per cent a year, with no levy after five years.

Investors can make one free switch between strat- egies each year.

Head of external affairs Nigel Snell says: “This product is much more in tune with clients’ desire for transpar- ency and choice, offering different strategies and no market value reduction.”

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