View more on these topics

Pru charges into with-profits

Prudential has designed a version of its prudence bond which has no initial charges and rewards investors who do make any withdrawals with an additional bonus of 0.25 per cent a year.

The Prudence bond offers investors the choice of two with-profits options. The optimum return fund focuses on stocks and shares, while the optimum bonus fund is slanted towards fixed-interest securities and cash for investors who need a higher level of income.

The original version of the prudence bond has a 5 per cent initial charge and a 1 per cent annual management charge. To compensate for the absence of an initial charge, the new version has a slightly higher annual management charge of 1.3 per cent and has lower allocation rates for investments of £20,000 and above. Both versions have a current reversionary bonus of 4.5 per cent, but the no initial charge version has a lower terminal bonus of 6.95 per cent. This is 0.3 per cent lower than the terminal bonus offered under the initial charge version.

Investors who cash in the bond during the first five years must pay an early redemption penalty. The penalty descends from 6 per cent in year one to 1 per cent in year five for investors who pay the initial charge. But where no initial charge is paid, the range is higher at 9 per cent in year one, reducing to 1 per cent in year five.

The Prudence bond is one of the better with-profits bonds available, and it could appeal to older and lower-risk investors who are planning to keep their investment for at least five years.

But there is a cloud on with-profits in general as falling stockmarkets have led to companies reducing their bonus rates. In addition, Royal & Sun Alliance has recently pulled out of the with-profits market, which is worrying because other names could follow.


…but IFAs with best advice panels beat the accusations

IFAs using best advice panels are both independent and free from commission bias, according to new research commissioned by the FSA for the polarisation review.The report by Cap Gemini Ernst & Young last summer exonerates panels from accusations of already being multi-tied, finding selection processes to be robust, subject to regular reviews and uncorrelated with […]

Julian Gibbs

Very often, last year&#39s worst performing sectors become this year&#39s winners. The worst performer in 2001 was technology, with the average unit trust being down by 47 per cent at the beginning of December. European technology shares were particularly badly hit.While technology shares will continue to remain volatile, there are now some bargains which the […]

Isis zero worships

FRIENDS IVORY & SIME ISIS PROGRESSIVE GROWTH TRUST Type: Oeic. Aim: Growth by investing in zero-dividend preference shares. Minimum investment: Lump sum £1,000, monthly £50. Investment split: 100 per cent in zero-dividend preference shares. Yield: 7.5 per cent. Isa link: Yes. Pep transfers: Yes. Charges: Initial 4.75 per cent, annual 1 per cent. Commission: Initial […]

Genesis Home Loans 3-year buy-to-let fixed

Genesis Home Loans, buy to let fixedFixed term: three years Fixed rate: 6.49%Minimum loan: £40,000Maximum loan: £300,000Income multiples: 3.25 +1, 2.75 x jointArrangement fee: £325Redemption fee: 6 months interest at SVR during fixed periodConditions: rental income must be 130% the SVRIntroducer&#39s fee: refer to packagerTel: 01832 275 044


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm