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Prudential bond wraps up for Christmas



Type: Unit-linked portfolio bond

Aim: Growth and income by investing in choice of five Prudential

Minimum-maximum ages: 18-89

Minimum investment: Lump sum £10,000

Allocation rates: Initial charge option &#45 £10,000-£19,999 &#45 102%,
£20,000-£49.999 &#45 102.5%, £50,000- £74,999 &#45 103.5 £75,000 and
above £103.75% No initial charge option – £10,000-£19,999 &#45 100%,
£20,000-£49.999 &#45100.25% £50,000- £74,999 101% £75,000 and
above 101.25% Rates reduced by between 2% and 4% for people
age 75 and over

Investment choice: Cautious bond, corporate bond, property bond,
prudence bond, managed bond

Income facility: Yes

Charges: Initial charge option – initial 5%, annual 1.25%-1.9%. No
initial charge option &#45 annual 1.55%-2.2%

Commission: Subject to negotiation

Tel: 08457 900999

Prudential&#39s flexible investment plan is a unit-linked portfolio bond
that provides access to five Prudential bonds, including a managed
bond providing access to over 40 internal and external funds plus
four ready made portfolios that are risk graded.

Independent Personal Financial Management proprietor Luke
Gibbon points out the product is a single premium bond with
additions, but feels it is expensive. He says: “The costs of the bond
are high, particularly the annual management charge which ranges
from 1.25 per cent to 2.2 per cent a year. The charges are reduced a
bit by the allocation of bonus units.”

He adds that while the initial costs are reasonable for larger
investments, this is marred by the surrender penalties in the first five
or six years.

Looking at the product in detail Gibbon says: “Prudential has
provided four bonds, and a managed bond with external funds and
four portfolios &#45 three of which have a mixture of Prudential/M&G
funds. The flexible investment plan has a number of added benefits
where the client can opt for programmed switches, an automatic
re-balancing of the portfolio at the end of each year and interest
sweep &#45 the automatic balance of interest from the cash fund to
another fund every three months. But only one of these three features
can be chosen at once.”

Gibbon highlights another useful feature, which guarantees that the
value of the bond in the event of the policyholder&#39s death will be at
least the initial investment less any withdrawals taken. “Also, the
bond can be linked to investment funds and up to 12 switches can be
made free of charges each year,” he adds.

Finally, Gibbon is asked for his thoughts on which products will
provide competition for the bond. He says: “While other single
premium bonds will provide competition, I would probably use
collective investment funds such as Oeics normally. The reason for
this is the favourable tax treatment and lower charges. Single
premium bonds suffer capital gains tax on the underlying funds but
they can be useful for with-profit investments and where a trust is
being used.”


Suitability ton market: Average
Investment strategy: Good
Charges: Poor
Adviser remuneration Average
Overall 5/10


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