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More than Liv Vic can say



Type: With-profits bond

Aim: Income by investing in equities, corporate bonds and property

Minimum investment: Lump sum £10,000

Bonus rate: 4.25%

Investment split: 30% equities, 30% corporate bonds, 40% property

Allocation rates: £10,000-£49,999 &#45100%, £50,000-£99,999 &#45 125%,
£100,000-£500,000 &#45 100.5%

Charges: 0.085% a month management charge

Commission: Subject to negotiation

Tel: 0845 6020690

Liverpool Victoria&#39s with-profits income bond aims to produce a high
level of income by investing in an underlying portfolio made up of 40
per cent property and 30 per cent each into high-yielding equities and
corporate bonds.

Michael Philips proprietor Michael Both notes that the charges listed
in the brochure for the with-profits income bond and the with-profits
growth bond are ambiguous.

He says: “The literature states that the monthly charge is 0.085 per
cent a month for the with-profits income bond and 0.075 per cent a
month for the growth version in the “first five years only by unit
cancellation”. Liverpool Victoria&#39s marketing department confirmed
that it intended to convey that after five years, there is a 0.085 per cent
charge a month that is not only by unit cancellation. Because of the
ambiguity, for professional indemnity purposes, IFAs may want to get
that confirmed in writing direct from Liverpool Victoria.”

Both adds that on the basis of what Liverpool Victoria has published,
the total annual charges are relatively high. He also thinks the early
encashment charges are high, but qualifies this by saying: “It could
be argued that this underlines that the bond is only suitable for a term
of at least six years.”

Despite his complaints, Both feels that Liverpool Victoria has enjoyed
a good reputation among the dwindling band of with-profits fans. He
says: “Its targeted asset mix for the income bond is appropriately
conservative and the free asset ratio is relatively good which explain
the 5 star AKG and 9/10 Cazalet ratings.” He notes that the income
version is less dependent on equities than the growth version and
feels the allocation rate is high.

However, on the downside, he points out investors taking above the
natural bonus rate on regular withdrawals, even if no more than 5 per
cent a year may attract a market value reduction. He concludes by
suggesting Liverpool Victoria should expect competition from
Prudential&#39s with-profits products.

Suitability to market: Average
Investment strategy: Average
Charges: Average
Adviser remuneration: Average


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