Portman Dual Bond !

montycat_2

Hello,
Just wondering if anyone had experience of this .

montycat_2

No-one heard of it then.Its a 70% tied in long term investment(a mix of property,sharea etc) and 30% in a 7% savings for 6 months .This then gets transferred to a high rate account .
Just wondering if it sounds a good idea

cheerfulcat

Hi, montycat,

Can you post a link? I couldn't find a reference on the Portman BS site. As a general rule, these " dual bond " type things are not a good investment. The interest on the deposit account is great, but it's only for a short period, and the "investment" part is usually a with profit bond ( boo :-) ).

HTH

Cheerfulcat

montycat_2

Can you explain a "with profit" bond please ?

cheerfulcat

http://www.finance-glossary.com/terms/with-profits-bond.htm?id=1543&ginPtrCode=00000&PopupMode=false

Basically, they are funds which aim to "smooth" investment returns ( making them less volatile, in theory ) by crediting you with annual "bonuses", the size of which is determined partly by stock market movements and partly by how much money is in the pool. There are many reasons to dislike with-profits bonds, not least the fact that currently bonuses are very small to non-existent, so returns will be very poor for the forseeable future. Add to this the fact that most wp bonds are now also subject to an exit penalty ( they call it a Market Value Adjuster or MVA ) and you have something that a sensible investor would steer away from.

dunstonh

I still cannot find any reference to it in any research material available to me. However, the structure of it isnt the sort of thing that would interest me at all. Im not a fan of these types of products as they always seem to combine things which could be better in their individual pots.

montycat_2

I have an idiots guide written somewhere about it but I wondered if anyone actually had one .
I haven't decided yet what to do with my nest-egg but I am going to seek 2 other opinions .
I don't want to tie my money up in too many different accounts as I like things simple .
I need a bond/account etc.that can protect my initial investment ,provide a small income and grow at the same time .
Maybe I am seeking the impossible .

dunstonh

It may be simple this way but these structured products work out quite expensive over the term. They often keep all or part of the income for themselves to underwrite the protected part.

A simple portfolio with a fund supermarket which invests in a range of funds weighted towards your personal risk profile would allow a single statement/account but do the same sort of thing. It would be cheaper and you wont have a building society creaming tons in charges.

montycat_2

Hi ,
just found the blurb,
The dual bond is a 70/30 split with 70% going into a Portfolio bond and 30% into Portman fixed plus bond account .
The portfolio is an investment bond "with the choice of over 100 different funds taking in all 4 asset classes"
the 30% goes into an instant acces account currentkly paying 7% for 6 months -after this I can switch it to a bond paying a decent amount (this part is instant access).there is no mention of with -profits in it .I can withdraw 7.5% per annum without penalty .

It seems that the latter that you mentioned is what this is .
I did an investment risk assessment and this maintains my capital and gives me a income as well.
Does this explain things clearer ?

dunstonh

Thanks for more information. As an investment bond, it will be invested in life funds. These can be more beneficial for those in the higher rate tax band currently but expect to be basic rate tax payers later or those who are retired and dont want to lose their age allowance. Some funds in investment bonds can also have lower charges than the unit trust equivalent. However, that is more likely with an IFA sourced product than a bank product. For basic rate, lower or non tax payers, the tax paid within the fund will be higher than unit trusts/OEICS/ITS/ISAs.

With a 100 funds its a large range for an investment bond. However, its still short of the the fund supermarkets. Not that you will use 100 funds, let alone more. Its just a case of what funds are left out to make up that 100. Are they all in-house and partner funds or are they mirror funds from the unit trust equivalent.

Ignore the projections. They are completely useless. Investment bonds use 4, 6 & 8%. That doesnt mean you will get those rates. You can get more or less depending on the fund(s) performance.

Although I still arrange investment bonds, the number of times they are used compared with unit trusts/OEICs/ISAs is much smaller. Roughly 15% of the time is a bond better advice than the others. So, cant say it isnt suitable or is suitable but I suggest you go to fidelity funds network and get an illustration on similar funds and see how the projections come out compared with the bond. Depending on your funds selected, the charges will show which is the best from that point of view.

Lastly, bank/building society products are generally far more expensive and usually limited in options compared with IFA sourced products or going direct. The in-house funds tend to be poorer quality too.