MultiBond - Skandia Distribution Bond
Income and growth by investing in a range of distribution funds
Lump sum £5,000
Skandia Axa distribution, Skandia DWS managed distribution, Skandia New Star managed distribution, Skandia Norwich distribution, Skandia Prudential distribution, Skandia distribution portfolio
Allocation rate increased to 103%
Until April 6, 2004
Ability to switch out of distribution funds into 300 other funds
Charges: Establishment charge 1% a year for first six years, annual 0.75%
Initial 7%, initial 5%, renewal 0.5%
Tel: 02320 334410
Investment Management Services proprietor John Wright identifies a trend emerging for distribution bonds as a replacement for with-profits bonds among low-risk investors. He points out that Skandia pioneered the use of fund links and he feels the company has arranged some good ones for this product.
When asked what he liked about the bond Wright says: “The ability to change fund managers and the ability to arrange monthly distributions by spreading the investment. This should prove very good for IFAs and their clients.” Wright also thinks the commission arrangement allows IFAs flexibility in that they can tailor it to suit the work they have done.
One of the drawbacks Wright mentions is the inevitable double charging which comes with a unit-linked linked product. He says that with other funds, such as equity and property funds, Skandia's switching facility can make up the additional charges so investors will not lose out. However, he feels that this type of product is a different case.
Wright can see competition coming from other distribution bonds but concludes: “Skandia should be congratulated for bringing its multi-manager approach to this area of the market.”
Suitability to market Good
Investment strategy Good
Adviser remuneration Good