The best and worst With Profit Bonds

With Profits are once again under fire after a survey by Money Management, the financial magazine, confirmed dwindling returns.

Its survey showed that over 10 years the average with-profits bond has produced an annual return of just 1.7pc. Significantly less than the 8.2pc average return recorded in 2003, when Money Management first started carrying out the survey.

To make matter worse the vast majority of insurers still levied exit penalties on customers who cash in their bonds. Just nine of the 25 companies surveyed don't currently impose these penalties - known as market value reductions (MVRs).

With Profits are once again under fire after a survey by Money Management, the financial magazine, confirmed dwindling returns.

Its survey showed that over 10 years the average with-profits bond has produced an annual return of just 1.7pc. Significantly less than the 8.2pc average return recorded in 2003, when Money Management first started carrying out the survey.

To make matter worse the vast majority of insurers still levied exit penalties on customers who cash in their bonds. Just nine of the 25 companies surveyed don't currently impose these penalties - known as market value reductions (MVRs).

As part of our annual review process we automatically review clients with profit bonds to ensure they continue to be useful investment in a clients overall portfolio. All new clients will receive a full with profits review as part of our investment review package.

The table below gives the best and worst performers over the past five years for an intial investment of £10,000. The figures in the table give the value of the policy if you cashed it in today, so they take account of any exit penalties charged.

 Best five bonds

Company

Cash-in value

Annualised growth rate (pc)

Wesleyan 

£13,240 

5.8

Norwich Union (Port Lev)

£12,610

4.7

Sheffield Mutual Inv Bond

£12,599

4.7

Norwich Union (Port Step Down

£12,518

4.6

Prudential

£12,458

4.5

 

Worst five bonds

Company

Cash-in value

Annualised growth rate (pc)

Royal London

£9,058

-2.0

Royal Liver

£9,192

-1.7

Engage Mutual

£10,124

0.2

MGM Advantage

£10,618

1.2

CIS

£10,652

1.3

 

Source: Money Management

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