Scottish Life International is launching a group of capital protected funds designed to compete agai...
Scottish Life International is launching a group of capital protected funds designed to compete against with-profits products.
The With Bonus Fund Range consists of six portfolios which aim to provide 95% downside protection, which is to be reset each quarter. At the end of each period the funds will pay out a bonus, dependent on the performance of the underlying investments, which can then be rolled over.
Five of the portfolios each track a different major world index. The UK With Bonus Fund follows the FTSE 100, the European version is linked to the Eurostoxx 50, the US portfolio follows the S&P 500, the Japan fund is linked to the Nikkei 225 and Protected.com With Bonus is linked to the Nasdaq 100.
In addition there is a more broadly-based option, the Protected Global With Bonus Fund, which invests across the Eurostoxx, FTSE, Nikkei and the S&P. Asset allocation is decided by a computer model designed by Dresdner RCM. This takes into account 75 macro and micro economic indicators.
There is a flexible commission structure for IFAs starting at 6%, and renewal rates are available if the initial commission is reduced.
The funds launch at the start of the next quarter and any money received by Scottish Life International prior to this will be put in a feeder fund attracting 5.6% gross interest.
The products are being sold through Scottish Life's branch network as well as through the offshore subsidiary. The quarterly bonus payable depends upon the state of the underlying equity and derivatives markets. Scottish Life International estimates that in current market conditions these bonuses would stand at around 9.5% per quarter for the UK, US, and European funds, 10% for the Japan fund, and 10.25-10.5% on the Nasdaq.
If the market remains flat or rises the full bonus is paid and a decreased bonus is paid out on a sliding scale for any fall up to 5%. Below this no bonus is paid out for the quarter.
The funds are all linked to the Scottish Life International Secure Investment Portfolio and the minimum investment into this is £15,000. Within this the minimum per fund starts from £800. There are no switching costs between funds.
The group has also developed a single asset allocation template called the World Wide With Bonus Strategy. This gives investments a 20% exposure to each of the UK, US, Japan, European and Protected.com funds.
Neil Edward Lovatt, marketing development manager at Scottish Life International said: "What we have done is to deliberately set out to create a cautious fund for the risk conscious investor who is looking for low risk and risk definition. We have created them to be direct competitors to the with-profits funds." He said the funds offer the clarity and simplicity that with-profits lack as there are no terminal bonuses or hidden expenses.
Achievements, charity work and other happy snippets
Laughable excuses for persisting
Spent 56 years at Schroders
Warns on profits