Engage launches Progressive Bond

Recent consumer research carried out by Engage has identified a real appetite for investment products offering the potential for higher returns than cash deposits, while not taking uncomfortable levels of investment risk.

In response Engage is now launching its Progressive Bond, which gives exposure to the Insight Investment Diversified Target Return Fund.

The Insight Investment Diversified Target Return Fund is a multi-manager fund which aims to deliver positive returns on an annual basis with the prospect of long-term capital growth commensurate with investment in equities. It also uses innovative risk-management techniques across a range of asset classes, with the aim of reducing the volatility of returns.

This is a further venture between Engage and Insight Investment, the asset manager of HBOS plc, and adds to Engage Mutual’s existing range of simple savings and protection products. This whole of life bond is the first investment product from Engage available exclusively via IFAs and will be available through selected IFA channels, Simply Biz and Park Row, who have the same high expectations for the potential of this product.

Andrew Haigh, Chief Executive at Engage Mutual commented: “As a modern mutual we are keen to provide long term investment products which help meet the needs of the modern family. Our relationship with Insight Investment gives us a great platform from which to provide our chosen IFA partners’ clients with access to a well-diversified, actively managed fund.

“This bond may appeal both to investors who want to avoid the volatility of stock market equities, and also to those who want to protect a proportion of any gains without high additional charges.”

Martyn Gilbey, Director, Third Party Distribution, Insight Investmentsaid:“We are delighted to be continuing our relationship with Engage to bring the benefits of the Insight Investment Diversified Target Return Fund to advisers and their clients with this new investment bond. Insight is committed to developing innovative solutions to suit the investment needs and risk profiles of our business partners and investors. We feel certain that this new investment bond, which gives investors the option of adding an element of protection, will be welcomed by today’s more cautious investors.”

Features of the New Product

Investment Options:

The bond offers access to two new funds, the Engage Diversified Protector Fund and the Engage Diversified Growth Fund, with two fund allocation options. Both funds provide exposure to specialist investments not widely available to private investors through the Insight Investment Diversified Target Return Fund. This is a multi-manager UCITS III fund investing across a number of asset classes including fixed income, cash, near cash and deposits, equities, property, currency, commodities and structured products with an absolute or target return. This fund’s objective is to deliver a managed return of cash +4% per annum over the life of the investment.

The Engage Diversified Protector Fund, with an annual management charge of 1.8%, offers an element of protection to the investment. This is achieved by Constant Proportion Portfolio Insurance (CPPI) techniques offeringa ‘soft-floor’ (i.e., not guaranteed by a third party), equal to 80% of the launch unit price. Every three months this is reviewed and locked in at 80% of the average unit price of the preceding quarter. Given long-term growth of the fund’s value, the soft-floor will ratchet up, locking in a proportion of any growth made by the fund over time.

The Engage Diversified Growth Fund has a lower annual management charge of 1.5% for investors who do not want this protection.

Investors will have the option of regular withdrawals of up to 5% of their original investment each year, without penalty, provided the remaining balance is at least £5,000. Early exit penalties apply under option two to any withdrawal, regular or ad hoc that exceeds 5% of the original sum invested each year in the first five years. The funds will be priced weekly and allow customers the option to exit at any time subject to any early exit penalties which may apply, unlike many Bonds which are based on fixed term derivative structures.

Other Product Features:

The new non-qualifying, single premium investment whole of life bond will be made available through IFAs to investors aged 18 to 85.

The minimum investment is £5,000 with a maximum investment of £500,000 per investor. Joint investments are allowed.

Further investments will be accepted with a minimum initial further investment of £5,000 and will be paid into a new bond in each case, allowing the IFA to split the investment(s) between fund options as required.

A 30 day cooling off period is given from receipt of the policy documentation.