The bond is available in three currencies, with a minimum investment of £50,000, euros 75,000 or $75,000. It provides access to 1,902 funds on its approved fund list but investors are not restricted to those funds.
The open architecture of the bond means that funds not on the list will be considered. Once NU has all the relevant information on the fund, it will take around two working days to decide whether the fund can be included in the bond. The decision will be based on UK portfolio bond regulations to ensure tax efficiency and NU may be able to negotiate special terms because of its institutional buying power.
Special terms are one of the advantages of investing in a fund already on the list, as many of these can be accessed with no initial charge. A cash account will also be established to hold any uninvested cash and any charges or withdrawals made from the bond will be taken from this account.
In terms of its charging structure, the bond has three options. Ooption one has a 100 per cent allocation rate, no initial charge and a quarterly establishment charge over the first five years. The establishment charge is 0.4375-0.5 per cent depending on the amount invested. Option two has 100 per cent allocation, no establishment charge and an initial charge of 0.75-2.5% plus any commission paid to advisers. Unlike the other two options, this does not have an early redemption charge. Option three has an allocation rate 102.75-104 per cent, no initial charge and establishment charge of 0.67% a quarter over the first five years. There will also be charges to pay on the funds selected.
This bond’s virtually unlimited choice of investment funds is an attractive feature and the charging options also add to its flexibility and emphasis on investor choice. The bond can be combined with NU’s new estate protection plan to reduce potential inheritance tax liability, which may be appealing for some investors. However, in practice the fund choices outside NU’s allowable fund list will be restricted by the UK tax rules – for example, closed-ended funds other than a UK approved investment trust are not permitted and any alternative investments must meet UK or Irish regulatory requirements.