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Review summary

Prudential International Portfolio Bond


Prudential plc is an international financial services group with significant operations in Asia, the US and the UK.

They have around 24 million customers and they have £509 billion of assets under management.

Prudential is listed on stock exchanges in London, Hong Kong, Singapore and New York.

The Group is structured around four main business units: Prudential Corporation Asia, Jackson National Life Insurance Company, Prudential UK and M&G.

M&G is Prudential’s UK and European fund management business with assets in excess of £246.1 billion.

Prudential is a leading international life insurer in Asia with operations in 13 markets, serving the emerging middle class families of the region’s outperforming economies.

In the US, Prudential owns Jackson National, one of the largest insurance companies in the US, providing retirement savings and income solutions aimed at the 78 million ‘baby boomers’.

Prudential International provides a range of flexible and innovative products to customers who want to combine the tax advantages of an international base with the reassurance of a household name..

Prudential International Investment Bond

The Prudential International Investment Bond is an international lump-sum investment product. It provides investors access to the world’s investment markets through unit trusts, investment trusts and open-ended investment companies.

Customer Reviews
Expert Verdict

You start your bond with a single premium of at least £15,000, EURO 20,000, or $25,000.  You can pay additional premiums at any time called top-ups.  The minimum top up is £15,000, EURO 20,000, or US$25,000. 

The Prudential International Investment Bond is set up as a group of identical polices.

The standard number is 20, although you can choose to have more or fewer.  You can cash in each policy separately, which may help you withdraw money in a tax-efficient way.

All charges of the Prudential International Investment Bond are shown on the personal illustration obtained from your financial adviser.

To help you keep your portfolio up to date without incurring great expense, Prudential International Investment Bond provides 20 free switches in any 12-month period.

There is no stated investment term on the Prudential International Investment Bond.  If you decide to cash it in completely, an exit charge may apply in the first 5 years.

Prudential International Investment Bond Key Features

Investment Choice – The Prudential International Investment Bond offers you a variety of funds, from more cautious options to more adventurous ones. You can choose up to ten at a time, to suit your needs and preferences. At the core of your investment choices are a select range of the Prudential Group’s “multi-asset” funds. These are funds that invest across a number of different asset types such as shares, property, fixed interest securities and cash.

PAC With-Profits Funds

Included in the funds offered are the Prudential Assurance Company (PAC) With-Profits Funds managed by Prudential. These are a particular type of multi-asset fund that is designed to smooth some of the volatility of investment markets.

A regular bonus is added to your investment throughout each year. A final bonus may also be added, although this can vary and is not guaranteed. Prudential has proven expertise in managing With- Profits investments, so you can be sure your investment is in good hands.

The PruFund Range of Funds

These are also designed to help smooth volatility, but work differently to the With-Profits Funds. In this case, your investment grows by an “Expected Growth Rate” which is reviewed and announced each quarter. There is also a smoothing formula, which takes account of short-term market movements.

This smoothing gives you a measure of cushioning against more extreme market movements, while the regular Expected Growth Rate announcements would give you some comfort around how your investment may perform in the future as well as how it has done so far.

Within the PruFund range there are two types of Protected Funds, Growth and Cautious, which offer a range of guarantee choices. These allow you to protect the value of your investment at a particular point in time, as well as choosing your preferred investment objective. There is an additional charge for the guarantee – the current options and charges are shown in “The PruFund Range of Funds: Guarantee options”.

The Dynamic Portfolios and Dynamic Focused Portfolios

The multi-asset range includes five Dynamic Portfolios and two Dynamic Focused Portfolios. Each of these is a “fund of funds”, which means that it invests in a collection of funds that are themselves run by some of the foremost investment managers in the country.

The Dynamic Portfolios combine the expertise of Prudential Portfolio Management Group Ltd, (PPMG), which has considerable experience of asset allocation, and Morningstar OBSR who are a leading investment fund researcher..

The portfolios are risk-graded, and target different levels of risk and potential return.

The Dynamic Focused Portfolios are managed by PPMG and offer access to a range of funds that use active and passive fund management approaches. These can help you plan for particular investment objectives.

Additional fund choices

The Prudential multi-asset fund range is complemented by a number of other funds, from both Prudential and other leading fund managers who have been chosen for their expertise in particular investment sectors.

This means you can choose from a variety of investment styles, as well as different markets and risk profiles. You can find details of all the funds, along with their investment objectives and other detailed information, in “Your Prudential International Investment Bond and International Prudence Bond funds guide”.

Multi-Currency - You can invest and take withdrawals in any of ten different currencies. This could be useful if you move to another country, either temporarily or permanently, as it may help to avoid exchange rate complications.

Capital redemption option

Rather than writing the bond on a life assurance basis, where it would end on the death of the chosen life assured, you can choose the capital redemption option.

In this case, the bond has a fixed term of 99 years, although you can cash it in at any time. If it is continued for the full term, it will pay a guaranteed minimum amount at maturity.

The capital redemption option can be particularly attractive for trusts, allowing the trustees to choose when to cash it in or instead to keep it going through successive generations.

Charges - The charging structure is flexible, which means in some cases it will be expensive!

You should be provided with a personal illustration that shows how the charges will affect your bond based on the amount you invest and example growth rates.

It will also show any adviser charges you have agreed to.

Charges will include a Set Up Adviser Charge (SAC) – which is around 5%, and on-going adviser charge  - 1% to 1.5%, underlying fund charges – 1% to 2%, and administration charges.

Early Encashment - If you cash-in your policy during an initial charge period, an early cash-in charge will apply, essentially a five year surrender penalty on a reducing scale.

The amount of this charge will be equal to the outstanding initial charges. This charge does not apply if the upfront initial charge period is chosen.

The Pros

> Popular expat investment plan
> Preferred choice of expat financial advisers
> Strong brand of parent company

The Cons

> Risk of hidden commission
> Potentially inflexible
> Commonly mis-used
What are the main risks with the Prudential International Investment (Portfolio) Bond?

The value of your bond can go down as well as up and may even fall below the amount you invested – what you get back is not guaranteed.

• Prudential's funds invest in stocks, shares and other assets which can rise and fall in value.

• Each of the investment choices available for the Prudential International Investment Bond has its own specific risks that will affect the value of your bond.

Some also have features which mean there are restrictions on taking money out or moving money between investments.

• In exceptional circumstances, a transaction (such as a full or partial cash-in) may be delayed which may mean you will face a delay in gaining access to your money.

• If more money is taken out of your bond, including charges, than the amount of growth, this will reduce the value of your investment.

• Fluctuations in exchange rates could affect the value of your investment or withdrawals.

Where is my money invested?

You and your adviser can choose which funds you would like from a specified range.

You can invest in up to ten funds at any one time.

There are three types of fund available:

  • the Prudential Assurance Company (PAC) With-Profits Range of Funds;

  • the PruFund Range of Funds; and

  • other Unit-Linked funds

Each fund available for you to invest in is divided into units of equal value.

Any investment you make is then used to buy units in the funds you select.

Unit pricing basis:

When you invest in one of our funds, your money buys units in that fund. The price of these units is primarily determined by the value of the assets held in the fund but also whether there is more money going into the fund or coming out of it, overall.

If there is a net in flow of money, the fund will be buying assets.

This means that the unit price will be influenced by the purchase price of the underlying assets in the fund.

Conversely, if there is a net out flow, it will be influenced by the sale price of the underlying assets, which is lower than the purchase price.

Over time, as the flows of money change, the unit price will fluctuate between a purchase price basis and a selling price basis.

At times, there may be a sharp movement between the two, meaning the unit price could rise or fall significantly. This will affect the price you pay to buy units when you invest in a fund or the value you receive from selling, if you are switching out of a fund or cashing in your bond.

What happens to the Prudential International Investment Bond if I die?

If you cover one life only, Prudential will pay out a lump sum when that person dies.

If you cover more than one person, you can choose for Pru to pay the lump sum:

• when the first person covered dies, or

• when the last person covered dies.

The life cover will end if you cash in your bond.

Where you choose to cover more than one person, the amount Pru will pay on death is based on the age of:

• the oldest person covered if the death beneift is payable when the first person dies; or

• the youngest person covered if the death benefit is payable when the last person dies.

The life cover will pay out either:

• 101% of the cash-in value of the bond – if the relevant person (ie the oldest or youngest as above) was 75 or under when you made the investment, or

• 100.1% of the cash-in value of the bond – if the relevant person was 76 or over when you took out the bond.

If you top up your bond, Pru will base the life cover for the top-up on the age of the people covered at the time that you make the top-up.

The death benefit will be paid out to the surviving owner(s), the estate of the deceased owner or, if the bond is under trust, to the remaining trustees, as appropriate.

If the owner dies but they are not the life assured, the bond will not end and ownership of the bond will pass to the owner’s estate, unless the bond was owned jointly or is under trust; in which case it will normally pass to the surviving owner(s) or to the remaining trustees, as appropriate.

More expensive than I thought

My adviser managed to roll his charges up in such a way I was oblivious how much I was paying. If I hadn't have paid out so much at inception I think this would have suited me...but now I'm not happy.

Expert Assessment of Prudential International Portfolio Bond

If you already have Portfolio Bond / International Investment Bond from Prudential International we recommend you get a X-Ray Review™ to give you all the information you need about benchmarked performance, taxation, fees and charges - so you can make an informed decision about whether this is the best product for you.

Prudential International Portfolio Bond Brochure

Prudential International Portfolio Bond Key Features

Prudential International Investment Portfolio Brochure

Prudential International Investment Portfolio Key Features

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