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MGM offers capital investment

MGM Assurance has introduced the sixth issue of its capital investment bond, a unit-linked bond that aims to produce income and capital growth.

The bond provides access to 11 MGM funds, including European, fixed interest, UK equity and North America. There is also one external fund, the Lazard managed fund and investors can choose just one or all 12 funds.

If income is the main objective, investors can take up to 7.5 per cent a year without penalty. Where more than this amount is taken during the first five years an early redemption penalty will apply. This reduces by 1 per cent each year, from 5 per cent in year one to 1 per cent in year five.

This version of the bond differs from the previous issues in that the allocation rate for investments of £40,000 and above is 105.25 per cent for investors up to the age of 75, which cancels out the initial charge of 5 per cent.

The product is likely to appeal to investors in the 50-plus age-group who may be looking for higher income than offered by building society accounts, with the potential for capital growth. The range of funds offered can be tailored to meet the needs of the individual, but higher-risk funds such as technology are not available.

Scottish Mutual&#39s flexible investment bond is a similar product offering 38 funds, including technology and with-profits funds, plus 23 external funds. This provides investors with greater investment choice, but the allocation rates are lower compared with the MGM Assurance bond.

According to Standard & Poor&#39s, six MGM funds are first quartile, three are second quartile and one is third quartile based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to February 11, 2002. The Lazard managed fund is third quartile on the same basis, but there is no three-year past performance for the MGM bonus growth fund.


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MGM Assurance – Capital Investment Bond

Monday, February 11, 2002.Type: Unit-linked bond.Aim: Income and growth by investing in up to 12 funds.Minimum investment: Lump sum £7,500.Fund links: Bonus growth, deposit, European, fixed interest,international equity, Lazards managed, managed, North American,Pacific Basin, property, special situations, UK equity.Allocation rates: Clients up to age 75, £7,500-£14,999 – 101 per cent,£15,000-£29,999 – 103 per cent, £30,000-£39,999 […]


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