Looking at Acorn Life - Capital Protected Lock In Bond 4: Any good?
- Thread starter ajapale
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M
mercman
Guest
From having a brief read, this Policy is guaranteed for 5 years only, and the upside of 10% only is guaranteed. There is no mention of the Charges applicable to this fund, so the amount placed in might be guaranteed for years but less charges which could be over 2% per year.
The joys of investing in a market that is not properly regulated.
The joys of investing in a market that is not properly regulated.
Brendan Burgess
Founder
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Acorn are notorious for very high charges. They were the last to sell their policies door to door although I am not sure that they still do.
I would certainly avoid them.
I would certainly avoid them.
LDFerguson
Registered User
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- 4,695
Hi aj,
I don't deal with Acorn Life so this opinion is a personal rather than a professional one. (Professionally I'm only authorised to offer advice on products from companies with whom I hold an agency.)
There are two aspects of this bond that I wouldn't be keen on.
(1) The performance of each company is capped at 10% when calculating the performance of the overall basket. This is a subtle but very important point. Performance of the overall basket is already capped at 10%. But this clause makes it virtually impossible for the basket to achieve 10% at all. If you think about it, for a basket of any 24 shares to achieve 10% on average, some will achieve less than 10% and some will achieve more, making up an average of 10%. But if those that achieve more are individually capped at 10%, then those that achieve less will drag the average performance of the basket down below 10%.
(2) Dividend income from any of the shares is not included in the calculations. This is common to most tracker bonds.
Regards, Liam
I don't deal with Acorn Life so this opinion is a personal rather than a professional one. (Professionally I'm only authorised to offer advice on products from companies with whom I hold an agency.)
There are two aspects of this bond that I wouldn't be keen on.
(1) The performance of each company is capped at 10% when calculating the performance of the overall basket. This is a subtle but very important point. Performance of the overall basket is already capped at 10%. But this clause makes it virtually impossible for the basket to achieve 10% at all. If you think about it, for a basket of any 24 shares to achieve 10% on average, some will achieve less than 10% and some will achieve more, making up an average of 10%. But if those that achieve more are individually capped at 10%, then those that achieve less will drag the average performance of the basket down below 10%.
(2) Dividend income from any of the shares is not included in the calculations. This is common to most tracker bonds.
Regards, Liam