Scottish Mutual has launched two versions of its new "Sandler-style" smoothed investment bond, desig...
Scottish Mutual has launched two versions of its new "Sandler-style" smoothed investment bond, designed to replace the with-profits bonds withdrawn last year.
This is Scottish Mutual's first investment product to follow the broad rules set out by Ron Sandler last year in his review of the retail financial services industry.
The Smoothed Investment Bond will follow many of Sandler's recommendations including "see-through" charging structures - compared with previously opaque charging on traditional with-profits funds - made up a very low annual charges and a simple establishment charge to cover commission.
It will also include the "100/0" funds allocation with no transfers to shareholders funds apart from the explicit charges, 'neutral smoothing', where the average balance of the smoothing account over time is zero and annual statements disclosing current redemption value.
The Scottish Mutual Bond offers a choice of two different funds: an income fund investing mainly in corporate bonds and a growth fund investing mainly in equities.
Investors can either invest in one or in a combination of both. However, the bond will only be sold through intermediaries and is designed to safeguard the investment by holding back money when performance is good and boosting returns when performance is poorer.
"It [The smoothed Investment Bond] combines a unique way of smoothing out the peaks and troughs of markets with a high degree of transparency. The way we will manage the fund is designed to ensure that the smoothed unit price broadly follows the actual value of the assets, but with a much reduced level of volatility," says Nick Kelly, head of investment products development.
Fund carries an annual management charge of 0.85% and an establishment charge of 1.3% per annum which is deducted for the first five years to cover distribution costs.
The minimum investment in a smoothed investment bond is £5,000.
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