Norwich Union is to offer a year-long performance guarantee on four of its Cat-standard Isa funds. ...
Norwich Union is to offer a year-long performance guarantee on four of its Cat-standard Isa funds.
Norwich Union has promised to make a payment into the fund equivalent to its annual management charge, currently 1% for active portfolios, if any of the funds do not achieve better-than-average returns against their peer group.
The guarantee applies to Norwich Union's UK Growth, UK Index Tracking, European Equity and Higher Income Plus funds and is available to Isa, Pep and direct investors, via lump sum investment or regular savings.
The offer starts on 1 April and ends on 31 March 2001. Norwich Union will make the payment into any of the funds that fail to beat the average return in their respective peer groups using a calculation on a bid-offer basis, assuming all net income is reinvested and an initial investment of £1,000.
Calculations will be carried out by independent research company Fitzrovia International. The peer group against which each fund will be compared will be fixed as those in the relevant Autif sector on 31 March 2000.
The only exception to this is the Higher Income Plus fund which will be compared with those funds in the Autif UK General Bonds sector that Fitzrovia determines are comparable in terms of investment objective.
All four funds offer an initial commission of 1.5% and renewal of 0.15%, both paid by the group and not the investor. The funds carry no initial charge, but the annual fee on the three actively managed funds is 1% and the fee for the index fund is 0.9%.
Mark Skinner, director of sales and marketing at Norwich Union Investment Funds, said the initiative aimed to promote the benefits of funds with low charges.
He added: "Recent research commissioned from Fitzrovia shows that non-Cat standard funds may never regain the lost ground created by their high charges."
The increase in minimum AE contributions has had little impact on opt-out rates - with cessations after April increasing by less than two percentage points, data from The Pensions Regulator (TPR) shows.
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