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.
