Engage Offers New Insight For Cautious Investors

Posted in: Products Last updated: 10 Nov 2006

Engage Mutual Assurance this week launches a new single-premium bond tailored to the needs of cautious investors who want the security of returns with fewer fluctuations in value compared with equities, together with a guarantee that they will get back what they have invested at certain anniversaries.

The Protected Investment Bond will be invested in the Engage With-Profits sub-fund, which in turn is invested in the Insight Investment Diversified Target Return Fund, a multi-manager UCITS III fund which can reduce volatility by investing in a diversified range of regions and asset classes. The new product will be available to investors aged 18 to 80 and has a minimum investment requirement of £5,000. Existing customers with maturing savings plans can invest in the new product without incurring exit penalties via the Protected Loyalty Bond which is also being launched.

The Protected Investment Bond represents Engage Mutual’s first investment solution through a new alliance with Insight Investment, the asset manager of HBOS plc, and adds to Engage Mutual’s existing suite of simple savings and protection products.

Karl Elliott, Marketing Director at engage Mutual Assurance, commented:

“As a modern mutual we are keen to develop products that meet the needs of the modern family. Our customer research tells us that many investors want the potential of good returns without exposing their money to severe risk and our relationship with Insight Investment gives us a great platform from which to help meet customer needs. This product will appeal to investors who are cautious about the volatility of stock market equities and who are looking for some capital protection.”

Martyn Gilbey, Third Party Distribution, Insight Investment, said:

“We are delighted to be joining forces with Engage to bring the benefits of the Diversified Target Return Fund to its new and existing customers. This exciting alliance marks the start of what we are sure will be a highly successful collaboration and we are very much looking forward to working with engage to develop further innovative propositions as this relationship evolves.”

Features of the new product:

The investment offers the extra security of returns with smaller fluctuations in value compared to equities, and a guarantee that investors will get back what they have invested, less withdrawals, if they encash on the fifth or tenth anniversaries1.

The 100% cash investment offered by the Protected Investment Bond is invested in the engage With-Profits sub-fund, and in turn invested in the Insight Investment Diversified Target Return Fund. This is a UCITS III multi-manager, multi-asset, multi-region absolute return fund that gains exposure, generally via investment in collective investment schemes to a wide range of asset classes including fixed income, cash, equities, property, commodities and certain types of absolute return products. Its aim is to deliver positive returns on an annual basis with the prospect of long-term capital growth commensurate with investment in equities.

The product is open to any investor aged 18 to 80 with at least £5,000 to invest (maximum £500,000).

Assuming annual growth of 6%, an investment of £7,000 could be worth £8,160 after five years, and £9,810 after ten years2.

Depending upon the opening amount invested in the Protected Investment Bond, the allocation made in the bond is as follows:

£5,000 – £9,999         101%

£10,000 – £24,999    101.5%

£25,000 – £49,999     102%

50,000+                     102.5%

Penalties for early encashment in the first five years are as follow:

Year 1      7%

Year 2      6%

Year 3      5%

Year 4      4%

Year 5      2%

More for existing Engage Mutual Customers

For existing Engage Mutual Assurance customers, a similar Protected Loyalty Bond is also being launched which offers customers transferring from other engage products the same fund as the Protected Investment Bond without the exit penalties. Existing customers are also able to make a minimum investment of £2,000, with a 100% investment on an initial investment between £2,000 and £4,999.

1 Money back guarantee also applies at subsequent 10 year anniversaries
2 Growth is not guaranteed

The value of the bond can go down as well as up and investors may get back less than they originally invested. Withdrawals in excess of 5% of the original investment in any of the first five policy years will incur exit charges. If an investor withdraws more than the amount by which the plan grows then this will erode the capital, possibly to an amount below the original investment. The value of any assets denominated in a foreign currency may be affected by exchange rate fluctuations which may cause the investment to go down or up. Making a partial or total withdrawal could result in the loss of some or all of an investor’s higher personal age allowance and may result in a tax liability. Any changes in taxation rules could affect the amount an investor gets back or the amount of tax they pay Charges under this Bond are 1.75% per annum