Scottish Equitable International has created a capital redemption version of its Dublin private client portfolio.
The capital redemption private client portfolio differs from the company's existing portfolio bond in that no lives are assured. The capital redemption structure is more appropriate for businesses and corporate trustees because the death of an individual will not automatically result in the payment of benefits.
Instead, the bond can be held over a term of up to 99 years, which gives corporate investors more control over when to pay tax on the proceeds.
The bond provides access to a range of internal funds and externally managed Oeics and unit trusts. Scottish Equitable International allows investors to choose any fund providing the management group is well known rather than an obscure name.
The bond offers a choice of three charging structures. The initial costing option has a 7.25 per cent up-front charge. The five-year costing option has no initial charge but instead has a 1.8 per cent annual management charge over the first five years. The ongoing costing option has a 1.5 per cent annual charge for five years and a 0.5 per cent a year ongoing charge.
Steven Whalley, product marketing manager at Scottish Equitable International, says the bond is being aimed at cash rich companies that need higher returns than are available on deposit accounts, as companies get even lower rates than individuals.
In 2002, Clerical Medical identified the UK corporate market as ripe for offshore expansion and developed the capital investor bond. This capital redemption bond also has a 99-year term and was designed as a tax-planning vehicle like the Scottish Equitable International product. However, Clerical Medical's product is not a portfolio bond and offers access only to Clerical Medical funds, so investment choice is limited compared with Scottish Equitable International's offering.