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NU looks at active and passive WP

Norwich Union is considering offering both actively and passively managed with-profits.

Sandler proposes restrictions on investment risk for a vanilla stakeholder product, which would operate under the price cap, and says active fund management is expensive and ineffectual.

Proposals include the ring-fencing of with-profits for safe haven products, which the ind-ustry says could lead to more companies offering different flavoured with-profits funds.

NU says Sandler&#39s proposals means individual life firms will not simply offer a single with-profits fund. In addition to funds differentiated by different styles of fund management, chief actuary Mike Urmston says the products could be differentiated by varying smoothing and guarantees. Currently, around 75 per cent of NU&#39s withprofits is passively managed.

L&G retail investments dir-ector Simon Pistell says: “The price cap might make companies look more closely at passive management but it is smoothing and guarantees that have the real cost, not the fund management in with-profits.”

Urmston says: “The vanilla with-profits could be run differently. We could offer with-profits on an actively and passively managed basis. But the vanilla version might not be appropriate for some investors.”

The Abacus director Philip Martin says: “The question is how much is in equities rather than how it is managed. How far has with-profits moved away from passive management in the past anyway?”

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