New research from investment management company Managing Partners Limited (MPL), reveals a very low level of penetration of with-profits based products among those aged 35 and under.  Its findings reveal that only 7% of people aged between 25 and 34 have a with-profits based investment.    This compares to 30% of people aged 35 – 44 and 33% of those aged between 45 and 54.

Jeremy Leach, Managing Director of MPL, said: “Many of the people in the older age groups with with-profits investments will have endowments that they opened many years ago, before the industry began to falter leaving many homeowners with a shortfall in terms of paying off their mortgage.  Far fewer people are now opening with-profits products and this is reflected by the fact that so few young people have one of these investments.”

In terms of investor satisfaction levels concerning with-profits based investments, the research shows that with-profits investors aged 55 and over are the most disillusioned.  Nearly one in three do not plan to continue investing in their with-profits products.

Investors looking for an alternative to with-profits investments that provide steady, predictable returns should consider investing in Traded Life Policies (TLPs). These are United States-issued life assurance policies sold before the maturity date to allow the original owner to enjoy some of the benefits during their lifetime.  TLPs are purchased at a discount from their maturity value, which in the majority of cases is fixed at outset, which means that they are guaranteed to rise in value. The TLP market has seen huge growth from $50m in 1990 to $10bn in 2006.

While TLPs carry the risk that it is unknown when the lives assured will die, the key attraction of a TLP fund is that with the right diversification and actuarial analysis, they can be used to deliver steady, predictable returns. Because of this high degree of certainty and their solid underlying value, it is possible for products that invest in them to secure a substantial degree of gearing to enhance returns and initial allocation rates. This is particularly attractive to UK investors in countering the surrender penalties imposed for pulling out of with profit funds.

For retail investors, MPL offers the Corinthian Growth Fund. The fund is a fully-regulated Cayman Islands mutual fund that can be included in personal portfolio bonds, wraps and SIPPs. A popular feature of the fund is its 2X-leverage facility, enabling returns to be enhanced. The fund has no initial charge and a 103% allocation rate. The annual management charge is 1%. It has a 7-9% annual growth target net of all charges.

Corinthian offers an ‘enhanced growth’ share class to retail investors, which has a 103% allocation rate and a 1% annual management charge. Such shares are suitable for investors looking to transfer assets from funds that have failed to deliver on expectations, such as with profits, and which need an initial boost to the investment.

This entry was posted on Monday, May 28th, 2007 at 11:54 am and is filed under Managing Partners News. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.