Many international investors find managing a portfolio of funds an administrative burden.
With the International Executive Redemption Bond, Old Mutual International takes care of this by establishing a portfolio of Old Mutual International funds within the account and managing any paperwork on your behalf.
Normally if a particular investment is underperforming, then changing strategy or fund manager may mean you suffer not only exit penalties and new initial charges on a new investment, but also a possible tax liability as well.
By choosing an Executive Redemption Bond, you potentially avoid this problem.
The ERB bond is issued in the form of a single policy or a number of separate polices known as a “cluster of polices”.
The initial charging term is fixed (based upon the commission and charging structure agreed) at the time of the policy activation and this cannot be varied or waived; therefore, early encashment of the policy results in a “surrender charge” or “early withdrawal charge”.
The Old Mutual Executive Redemption Bond (ERB) Key Features
The Executive Redemption Bond is a capital redemption contract with a 99-year fixed term.
It continues until the end of the term unless cashed in earlier.
At the end of the term the bond has a guaranteed value of at least twice the premium amount you have paid (less any withdrawals or surrenders).
The Executive Redemption Bond provides flexibility and freedom of choice, through access to a wide range of investment asset types.
This wide investment choice is known as open architecture. It enables you to invest in mutual funds, stocks and shares, fixed-interest securities, multi- currency deposits, hedge funds, structured notes, exchange-traded funds and other alternative investment, which means you can customise your portfolio precisely to your individual needs and preferences, without having to compromise in order to fit in with pre-set rules and parameters.
Lump sum minimum of £50,000.
You can make additional lump-sum payments into your policy at any time with a minimum of £2,500. However your will pay any initial fund charges on all contributions.
The Old Mutual International Executive Redemption Bond can be set up a policy in 1 of 3 currencies including Pound sterling (GBP), Euro (EUR), United States dollar (USD).
The Old Mutual International Executive Redemption Bond is a regular premium, whole of life, life assurance contract issued by Old Mutual International (OMI).
It is available to most international investors outside of the main regulated territories such as the UK, the USA and Australia.
Choose an external custodian:
The structure of a bond means that you need a custodian to hold, on Old Mutual international’s behalf, the assets that you decide to link to your bond.
You can choose your own custodian, which is likely to be the financial institution you currently have a relationship and who are advising you.
If you don’t have your own custodian, then Old Mutual international will use its own appointed custodian to play this important role for you.
Charges - will depend on the type of plan you take out from Old Mutual International as they offer different charging structures largely linked to the amount of commission or earnings being taken by the third party salesman or adviser. They should, but may not always be the case provide you with a charges schedule, which will detail:
- The costs Old Mutual international levy for setting up and managing your bond
- The administrative costs of the fund managers
- Fees charged by your financial adviser.
A full encashment will result in exit penalties being applied in the early years through surrender charges linked to the term of the policy. The amount of this charge reflects the cost of Old Mutual Internationals set up fee, including any payments (such as commission) made by Old Mutual International to your financial adviser.
Old Mutual International has a great reputation but, in the pursuit of offering flexibility of charging structure to all types of advisers they have created a product that has the same name but completely different costs.
Those costs are dictated by the adviser and we have seen evidence to suggest that some advisers and adviser companies take the maximum commissions.