Called With Profit Bond, it is a unitised with-profits product aimed at low to medium risk investors. It can be set up to provide either income or growth and a terminal bonus is paid in the event that the bond is encashed by the investor.
Standard Life has chosen now to come in the the with-profits bond market because it feels similar bonds have offered unrealistic headline rates of between seven and nine per cent and then they have reduced after a period. It feels investors are looking for more realistic bonus levels.
The company believes that its own annual bonus rate of 4.5 per cent is realistic and sustainable under present market conditions, although this might change in the event that the market enters a period of bearish behaviour.
Standard Life is one of the very few mutual status companies left in the market and this gives it an advantage over competing products from proprietary companies, because its bonus rates should be more sustainable than those from companies with shareholders who want share dividends.