Type: Oeic fund of funds
Aim: Growth by investing initially in six Norwich Union funds and then in cash deposits to protect 80% of the highest share price from stockmarket falls
Minimum investment: Lump sum 1,000 or 500 through an Isa, monthly 50
Investment split: 15% Norwich Union UK equity income,10% Norwich Union UK growth, 30% Norwich Union UK index tracking, 5% Norwich Union UK smaller companies, 10% Norwich Union managed high income fund, 30% Norwich Union corporate bond fund
Isa link: Yes
Pep transfers: Yes
Charges: Initial 5%, annual 0.75%-1% plus annual 0.75% for protection element
Commission: Initial up to 3.5%, renewal 0.25%
Special offer: Initial commission increased up to 5%
Offer period: Until July 1, 2005
Tel: 0845 9444800
Norwich Unions active protector fund is an Oeic fund of funds that uses constant proportion portfolio insurance to protect 80 per cent of the highest share price. Hartley Greatbatch director Keith Lewis regards Norwich Union as a good company and likes the use of derivatives in new products.
However, he has some concerns about CPPI. He says: “Whether or not this is of use to Joe public I dont know. Using derivatives can be good for sophisticated and younger investors but I am not sure a fund which uses them as part of its investment strategy is appropriate for clients over 65.”
Lewis also feels that IFAs need to be careful when recommending this type of product in case clients come back to the adviser to complain that it was sold as a lower-risk fund, when this turns out not to be the case. He believes no more than 10 per cent of a clients portfolio should go into this fund.
Looking at the charges, Lewis feels they are on the high side although he realises that the guarantee must be paid for.
In conclusion Lewis cites Zurich, Standard Life and Premier as possible competitors but feels clients would be better served by a diverse portfolio of equities, fixed interest and property put together by their advisers.
Suitability to market: Average
Investment strategy: Good