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Multimanager with protection from Zurich

Zurich Assurance

Multimanager Protected Profits Fund

Type: Unit-linked fund

Aim: Growth by investing in Cazenove UK growth and income, Mellon Newton higher income, DWS American growth, Gartmore European selected opportunities and Barclays liquidity first funds

Minimum investment: Lump sum 5,000 via bond wrapper, lump sum 3,000 or monthly 100 via Isa, lump sum 20,000 via pension

Investment split: Up to 70% in equities, at least 30% in cash

Charges: Annual 1.85% via bond wrapper, 1.81% via Isa, 0.85% via pension

Commission: Dependent on wrapper product

Tel: 0500 546546

The multimanager protected profits fund is a unit-linked fund which uses constant proportion portfolio insurance to lock in 80 per cent of the funds highest share price. It is linked to the Cazenove UK growth and income, Mellon Newton higher income, DWS American growth, Gartmore European selected opportunities and Barclays liquidity first funds

Hargreaves Lansdown senior analyst Meera Patel says: “One of the advantages of this product is that there is no lock in period and it does not apply a market value reduction. The fund is also flexible in that it is available for most onshore tax wrappers.”

According to Patel, one of the most attractive things about the product is its choice of equity managers. She says: “Zurich has chosen some solid and well known fund managers with good track records. Being a protected fund, there are often hidden costs involved. However, investors will also be able to switch into or out of the fund without any cost in the majority of cases.”

Switching her attention to the potential drawbacks of the product Patel says: “Firstly, the charges are relatively steep. On top of the annual management charge, there are also additional wrapper charges. Therefore, this is a pretty expensive product even if you have to pay for the protection it offers. I dont believe it is worth paying for the protection as the managers selected have the potential to deliver attractive long term returns.”

She adds that even though there is protection, there is still a small chance that investors could lose some money if they sell units in the early days. Patel also complains that the name of the product can be misleading as the word protected can suggest there is some kind of guarantee, while there isnt a guarantee.

She says: “Finally, the literature does not make it clear exactly how the protection works. On the face of it, the product looks easy to understand and transparent but there should be some emphasis on how the protection works.”

Scanning the market for possible competitors to this product Patel says: “There are no products that match this one exactly, but I would see other multi-managers as the nearest competition, although the majority do not offer any kind of protection..

“However, I would give up the protection for a multi-manager offering a greater diversity than just five managers and where I could see the growth potential to be much higher.”

BROKER RATINGS

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

Overall 5/10

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