London & Manchester Unit Linked Endowment Performance

mariek_2

Hi

I wonder if anyone can enlighten me on the performance of London and Manchester Assurance Investment Mortgage Plan Flexible Fund (now owned by Friends Provident) I took it out in April 1988 to cover a £75,000 mortgage. It is due to mature in six years - June 2013. According to the statements the type of unit is "master accumulation units". I haven't been able to find out anything about whether it's performance has improved over the last few years.

I did write to Friends Provident to complain about being mis-sold a few years ago and all I go back was a letter to say I took my policy out before the FSA rules and details the value of the units at the time.

Thanks.

Marie

dunstonh

They offer a range of funds. Some with better potential for returns.

Modern investing techniques involve using more than one fund so you dont get the eggs all in one basket approach that you get with older products or novice investors. Single fund investing will result in lower returns over the long term.

It has only had above sector average performance 3 years out of the last 20. The average growth rate since 1988 is 6.63%. The last two years are 7.89% and 18.13%.

You should look at a fund switch and arrange a better spread.

mariek_2

Thanks Dunston.

The figures you gave for the last two years sound like the endowment is not a complete turkey.

I'm afraid I have more questions:-

Does that mean the performance is not abysmal? What is the average sector performance? What does fund switching involve? How do I find out which the potentially better performing funds are? Where can I get information to track fund performance or is it something that only financial specialists have access to?

Marie

dunstonh

The figures you gave for the last two years sound like the endowment is not a complete turkey.

It shows recovery but they have better options. I wouldnt want to be in that fund if it was my money.

Does that mean the performance is not abysmal?

Not asbysmal but not good enough.

What is the average sector performance?

It was in the balanced managed sector which is never one for great performance. Its a jack of all trades fund in a jack of all trades sector so you never get above average performance.

sector average last year for balanced managed was 6.91%. year before was 18.34%.

in 3 of the last 5 years it has performed above sector average. However, to show how stats can distort things, i can also say that it only beat sector average 3 years in the last 15! Although the trend is the right way round if you believe such a thing.

What does fund switching involve?

Finding out what fund range is availalble to you. Ask FP to send you the list in writing and a fund switch form.

How do I find out which the potentially better performing funds are?

Once you know the list that is available, you can look them up on the FP website or an independent site like Trustnet.

Where can I get information to track fund performance or is it something that only financial specialists have access to?

The paid for software I and other advisers use (at least those that use it) is generally higher quality and more detailed than the free information (wouldnt pay for it if it wasnt and the information comes from the same providers that provide the free versions so they have an interest in keeping the free stuff lower quality). However, you can get a relatively good bit of information on the trustnet site.

mariek_2

Thanks again Dunstonh.

I will write and get a list of funds.

I'll probably need more guidance once it comes through - how much do you charge. The financial advisers I come across in the past have only been interested in selling me more products (which I can't afford) but I'm considering paying for expert advice to try to keep this policy on track.

Marie

EdInvestor

What interest rate are you paying on the mortgage?

With the endowment only performing at a bit over 6% in present markets you might be better off to surrender it and use the money to reduce the mortgage - you may get a similar return but with no risk.

mariek_2

EdInvestor

I've just fixed at 4.95 with ING Direct for 2 years.

Marie