The best and worst: Costs curb maximum returns

Click to follow
The Independent Online
MAXIMUM investment plans are long-term regular savings schemes with an element of life insurance that offer tax- free proceeds. But the contracts - generally for a 10- year-term - are rigid - which means penalties for cashing them in early, and hefty charges at the outset of to cover sales commission.

Money Management magazine concludes that, on the whole, they are poor value because of the costs. Over ten years, the average MIP invested in a UK equity fund would have returned pounds 10,045 after charges, while the average UK equity income unit trust, held within a PEP, would have produced pounds 12,906 after charges. (UK equity funds and general managed funds, which can invest overseas, are the most popular with MIP investors.)

Dennis Smith, marketing manager at Providence Capitol, said the company was taking steps to improve the performance of its UK fund. The company also has a Special Markets managed fund that invests throughout the world and has produced good results for maximum plan investors.

The top-performing fund of NM Financial is run by Capel Cure Myers, the stockbroker. Fund manager Kenneth Levy said 60 per cent of the fund is invested in UK equities, and he is increasing its exposure to smaller companies.

The Best & Worst report on 4 April on unit linked insurance company funds mistakenly stated that Royal Life, Royal Liver, and Reliance Mutual were at the bottom of smaller company funds. In fact, they were ranked No 10, 11 and 12 out of 55 funds. In the bottom three places were Century Life, UK Life and Continental LIfe.

----------------------------------------------------------------- BEST AND WORST: MANAGED FUNDS ----------------------------------------------------------------- Maximum Investment Plans ----------------------------------------------------------------- The best pounds 1 NM Financial-CCM Vanguard . . . . . . . . . . . . . . .10,367 2 Provident Mutual. . . . . . . . . . . . . . . . . . . .10,115 3 Sun Life . . . . . . . . . . . . . . . . . . . . . . . 10,104 4 AXA Equity & Law . . . . . . . . . . . . . . . . . . . .9,880 5 Scottish Widows-Managed Investor Policy. . . . . . . . .9,861 The worst 28 Merchant Investors. . . . . . . . . . . . . . . . . . .8,297 29 LAS (Life Association of Scotland). . . . . . . . . . .8,247 30 Barclays Life - Managed . . . . . . . . . . . . . . . .8,029 31 Providence Capitol - UK Managed . . . . . . . . . . . .7,927 32 Aegon . . . . . . . . . . . . . . . . . . . . . . . . .7,850 maturity value, at 2 January 1993, of investment in 10-year-term managed fund (premium pounds 50 a month) ----------------------------------------------------------------- Source: Money Management -----------------------------------------------------------------

Comments