Scottish Life International is launching a stable of 95% capital protected guaranteed with-bonus fund...
The range of six funds, based on five of the world's most important stock markets, are designed to offer safety and smoothing against market volatility and will pay bonuses - depending on market performance - on top of the protected 95% capital.
The UK With-Bonus fund covers the FTSE, the European With-Bonus fund covers the Eurostoxx 50, the US With-Bonus Fund covers the S&P 500, the Japan With-Bonus fund covers the Nikkei 225, and the Protected.com With-Bonus covers the Nasdaq 100. The Protected Global With-Bonus fund is computer-managed to distribute exposure between the Eurostoxx 50, the FTSE, the Nikkei 225 and the S&P 500.
There is a flexible commission structure for intermediaries starting at 6%. However, renewal rates are available if the initial commission is reduced.
The funds, which are now open to investors through a feeder cash fund paying gross 5.6%, will be available through Scottish Life's local branches.
The funds will pay bonuses at the end of every quarter on top of the guaranteed 95% capital, making the funds slow-building capital accumulators.
The bonuses, which are announced at the start of each quarter, are delivered from the simultaneous sale and purchase of two different types of option on the underlying markets, otherwise known as a call spread, so will vary from fund-to-fund and quarter-to-quarter.
However, the company says that under current conditions these bonuses would stand at around 9.5% payable per quarter for the UK, US and European funds, 10% for the Japan fund, and 10.25%-10.5% on the Nasdaq. The full bonus is paid if the market remains flat over the quarter and, provided it does not fall by more than 5%, a falling scale of bonuses is still paid.
The funds are entered through the Scottish Life International Secure Investment portfolio of products which requires a total investment of £15,000. However, once in the portfolio, as little as £800 can be invested in each fund and there are no costs on switching between funds.
The life company has developed an investment strategy on top of the six-fund range called the World Wide With-Bonus Strategy. This spreads risk with 20% exposure to the UK, US, Japan, European and Protected.com With-Bonus funds.
Neil Edward Lovett, marketing development manager at Scottish Life International, said the funds offer the clarity and simplicity that with-profits funds lack as there are no terminal bonuses or buried expenses.
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