The product was designed to help investors create an investment portfolio tailored to their individual risk profile and to keep the portfolio in line with the risk profile. Individual attitude to risk is assessed, enabling Way Group to provide a bespoke portfolio comprising different weightings to three of Way’s multi-manager funds – global cautious, global total return and global red. Higher risk profiles will receive greater exposure to growth strategies over the shorter term, while lower risk profiles will have greater exposure to cautious strategies over the longer term.
Instead of using a questionnaire to identify an investor’s risk profile, a planning document will list investor’s requirements over three time horizons.
The product also offers rebalancing on a quarterly basis. According to the Way Group, portfolios can get out of sync with the client’s needs because of market movements.
To solve this problem, the portfolio management service will offer the same quarterly rebalancing as the existing Way income plan.
In practice, this means bringing the portfolio back to its original aim by taking profits from higher growth elements of the portfolio in rising markets or putting more money into these higher growth strategies when markets are falling.
Way Group says quarterly rebalancing will help the client’s portfolio to take advantage of volatility so it becomes useful rather than something to be feared. It also says the product’s status as a Luxemburg-based bond comprised of at least 100 separate policies means that it is tax efficient. and flexible.
Investors can cash in each policy separately, which leaves the remainder of the investment undisturbed. The underlying assets are owned by an offshore life company which pays no UK tax, which means rebalances are free from capital gains tax. Investors can also take out the bond on a multiple lives assured basis to avoid any income tax problems if they die while invested in the bond.
Investors may find a tailored investment portfolio and quarterly balancing attractive features, alongside the advantage of tax-free growth. It important that investors understand that they tax will usually be payable when the policies are encashed and the proceeds brought back onshore.