View more on these topics

Product matters

By offering a guarantee to new investors, Norwich Union is reinforcing its commitment to the with-profits market. In light of the speculation regarding Standard and the negative press sentiment concerning with-profits in general, this is a very defiant and bold move.

The guarantee ensures that, after five years, the minimum that investors will receive is their initial capital investment. If their investment has grown over the five years, they will be able to encash their policy – which may be subject to a market value reduction – but the payout will never be lower then the initial premium.

It is available for income seekers too but any encashment value will have the withdrawals over the five-year period deducted from the original capital value. At the end of the five years, investors will get the option to roll over for a further five years, switch into one of NU&#39s other unit-linked funds or encash their policy.

Not only is NU implying that it is optimistic for the markets over the forthcoming years but also that it has the financial resources in place to meet the guarantee, even if it has called it wrong and the markets underperform over the period.

NU is targeting 10,000 new investments into its WP fund by the end of the year. Although I am sure this is figure is achievable, I doubt that this offer will attract numerous new investors as many WP investors have become disillusioned due to falling bonus rates and high MVRs. However, I believe the guarantee will appeal to existing investors and/or investors who understand and are comfortable with the concept of with-profits.

Ben Willis is an investment analyst with Chartwell Investment

Recommended

Exam review now delayed until 2007

The Financial Services Skills Council has revealed further delays in its much anticipated exams review saying the review is now not scheduled to be completed until 2007. Newly-appointed FSSC managing director Teresa Sayers told representatives of the industry and the regulator the review timetable would be published in April, along with the first appropriate exam […]

Altmann fears firms dumping liabilities in protection fund

Independent consultant Ros Altmann, who convinced the Government to bring in a pension protection fund, says the way the fund has been drafted could lead to teetering companies dumping it full of liabilities in the first year. The plans were published in last week&#39s Pensions Bill. Altmann says the Department for Work and Pensions&#39 decision […]

Tilney to bring US fund onshore in retail move

Tilney is bringing its American growth fund onshore as part of its strategy to establish itself as a mutual fund provider in the UK retail market. The fund will be available as a sub-fund of Tilney&#39s UK Oeic. It has been run since launch in 1996 by Nicholas Roe-Ely, supported by Jane Drake. Roe-Ely says […]

Horror stories of NU&#39s service

I would like to appeal to all my colleagues in this industry to send me their horror stories regarding Norwich Union&#39s administration systems or, rather, lack of administration systems. For over a year, I have refused to place any business with this once respected company because of its failure to sort out numerous problems which […]

Sticking to valuation discipline when investing in China

Journalist Alexis Xydias discusses the opportunities – and potential pitfalls – of investing in China with Artemis fund manager Peter Saacke. With Peter holding significant positions in China in the Artemis funds he manages, journalist Alexis Xydias quizzes Peter on the risks of investing in Chinese stocks – including over-valuations, margin trading and financial reporting issues. Click here for video

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment