Type: Unit-linked fund
Aim: Growth by investing in equities, fixed interest and property
Minimum investment: Lump sum 5,000
Investment split: 65% in equities and property, 35% in fixed interest
Bonus rate: 4.25%
Allocation rate: 100%
Guarantee: Original capital returned in full regardless of investment conditions at end of year five years provided investors move out of the fund within two weeks of the fifth anniversary
Charges: Annual 0.5% in first five years plus charges on wrapper product
Commission: Dependent on product wrapper
Tel: 0845 9444800
The Norwich Union with-profit guaranteed fund is a unit-linked with-profits fund that provides the return of investors capital in the fifth year. It will be available through Norwich Unions portfolio investment bond, international caore funds bond and international with-profit bond.
Peter Ruddy & Partners director Peter Ruddy is amazed that providers who, along with the media, have destroyed investors confidence in with-profits still find a market for what looks like, at best, very modest returns.
However, looking for something positive to say about the Norwich Union fund he says: “For IFAs with clients who can get their heads around the recent media destruction of with-profits, then a guarantee of the may be interesting.”
Ruddy complains that the charge for the guarantee may be considered expensive. But he adds that guarantees have always been costly to clients but good for the provider.
Considering the Norwich Union fund in more detail he says: “Looking at the spread of investment, this does not look very different from a managed fund. If the money is invested for five to 10 years, why not go for the full value rather than what may be considered unnecessary softening over the medium to long term? We also think that the two-week window to encash at the end of the five-year period is very short term.”
Ruddy concludes that most, if not all, managed funds will provide competition and says his firm does not see a place for with-profits in its clients portfolios.
Suitability to market: Average
Investment strategy: Average
Adviser remuneration: Average