Norwich Union has published the principles and practices of financial management for its with-profits funds which all life offices must publish under the FSA's new realistic reporting regime.
The firm has also introduced a 0.75 per cent charge to pay for guarantees on its NU life & pensions with-profits fund to allow it to maintain a 52 per cent equity backing ratio.
Designed to increase the transparency of with-profits, PPFMs are complex documents which set out the amounts payable under a with-profits policy, the investment strategy, management of the inherited estate and calculation of asset share.
NU says it is imposing a charge on the NUL&P fund – revealed in Money Marketing last week – because it says it is the only way that it can avoid increasing the fixed-income element in the fund under the new realistic reporting regime.
The CGNU with-profits fund, which takes the majority of new business, and CULAC with-profits fund have an equity backing ratio of 65 per cent but no guarantee charge is being imposed.
NU's Provident Mutual fund, with an equity backing ratio of only 24 per cent, will not see a guarantee charge but projection rates will be reduced to reflect the lower anticipated overall returns, with the middle rate reduced by 1.5 per cent.
NU chief actuary Mike Urmston says: “The introduction of PPFMs demonstrates greater transparency in with-profits reporting and we now have a complete picture linking together realistic reporting, investment policies and bonus declarations.”
Informed Choice managing director Nick Bamford says: “When is a guarantee not a guarantee? When the product was sold on the basis of the guarantee, I bet nobody pointed out that a charge could be brought in to pay for it.”
Scottish Widows Investment Partnership has launched a European corporate bond fund with a minimum investment of £25,000.
Swip, which has around £46bn under management in the fixed-interest and treasury markets, says the fund will aim at top-end discretionary investment managers, private-client stockbrokers, private banks and institutional investors.
The fund will invest predominantly in euro credit investment-grade securities. Swip claims it is one of only a few offering access to the European corporate bond market.
It will be managed by global bonds team investment director Gareth Quantrille. He runs a number of corporate bond portfolios and is experienced in researching global corporate bond markets.
The fund will be a sub-fund of the Swip Oeic. It can be used as part of fund-of-fund managers' portfolios and discretionary managers' own Isa wrappers.
Wholesale business head Steve Hutton says: “The European corporate bond fund will increase the flexibility of our existing fund range, maximising our bond fund capability.
“The fund is one of a limited number existing in the market. It provides an excellent platform to further develop our wholesale client base.”