M&G is to offer its first protected Isa product between 6 April and 19 May. The M&G Protected Isa of...
M&G is to offer its first protected Isa product between 6 April and 19 May. The M&G Protected Isa offers investors return of original capital after five years plus 80% of the growth in the FTSE 100.
Investors can invest a lump sum of between £500-£5,000 and IFAs will be paid 3% commission but receive no renewal. The charging structure is built into the product but M&G estimates that it is around 5.1%, out of which the IFA commission is paid.
The majority of money raised will go into a medium term loan note provided by investment bank Jackson National. The loan note itself invests in corporate bonds and derivatives to provide capital protection and exposure to the upside of the market.
Bill Vasilieff, director of group product development at M&G, said: "We have been monitoring the market for the past few months and the volatility has been low so derivatives are currently relatively cheap."
Investors should hold on to the product for the whole five years, according to Vasilieff. If investors wants to exit during the period they would receive back the current market value of the corporate bond.
The launch of the product is another move for the group away from actively managed products having already launched some tracker funds including its Index Tracker fund which mirrors the FTSE All-Share. Vasilieff said that the group was trying to broaden its product range to appeal to risk averse investors.
Over the five years to 29 February the FTSE 100 produced a total return of 135% meaning £1000 invested five-years would be worth £2350 now.
An added tier of asset management can of course deliver additional benefits for certain investors, writes Graham Bentley - just be sure you can justify it to the regulator and, especially, the client
The government is "in daily contact" with industry figures over the pensions dashboard as it prepares for the roll-out and its feasibility report, Guy Opperman has said.
Organisation led by Johnny Timpson
From 1 April 2019
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