The Mysteries of Quinn Life/EBS

How the EBS can run a net fund for new investors

As Rupert doesn't have the telephone technique, I got out of my sick bed to ring the EBS on his behalf.

The Summit Fund is a Domestic UCIT product and, as such, is not a unit linked product and is not covered by the gross roll- up regime. Investors become shareholders in Summit Funds Plc as distinct from holders of unit linked funds.

The charges are publicised as 1.4% gross and 1.1% net and this is correct.

They also offer a gross roll-up fund with an annual management charge of 1.5% and they don't distinguish between gross and net as it would be misleading.

EBS are not alone in still offering net funds to new investors. The Bank of Ireland Mutual Funds range is similar and I understand that Ulster Bank may also have such a fund.

Rupert - put away the knife and fork - your contributions to Askaboutmoney are far too valuable to run the risk of choking on your scarf.

But it does go to show that being a mutual doesn't mean an organisation is inefficient. The EBS has been running these funds since about 1990 and one of the reasons why they chose this route is that they are much more transparent in their charging structure. There is nothing to stop any of the other fund managers offering a similar product.

Brendan

EBS Mutual v Investment funds

Brendan - notwithstanding the fact that EBS prominently tout the different taxation options of the Summit Mutual (gross roll-up) and Investment (net) funds, both on their web site and in their printed literature, I have to agree with Rupert that they do seem a little confused. For example, if you look at the application forms for the [broken link removed] and the [broken link removed] you will see that they are both exactly the same and both state that:

<!--EZCODE ITALIC START--> 7. Tax is paid by the Investor on the gain made in the investment when an encashment is taken. Tax is deducted at the standard rate plus 3% and is paid to the Revenue Commissioners on your behalf.<!--EZCODE ITALIC END-->

Now, surely that can't be a net fund!

Re: Saved From a Horrible Death

Thank you <!--EZCODE ITALIC START--> CM<!--EZCODE ITALIC END-->.

I had just started eating my scarf and as the <!--EZCODE ITALIC START--> Boss<!--EZCODE ITALIC END--> pointed out, since I was still wearing it, I was starting to choke.

But now we have it clear. Mystery solved.:|

<!--EZCODE BOLD START--> Since the start of this year the taxation of all UCITS, Unit Trusts, Life Funds, OIECs etc. etc. have been Gross for new customers.<!--EZCODE BOLD END-->

The EBS Website and Brochure is up the left.>:

Re: Saved From a Horrible Death

Hi CM

It seems to me that they have put up the wrong form on the website for the Summit Funds. I will draw it to their attention.

Rupert - My main concern is that you have not choked on your scarf?

<!--EZCODE QUOTE START--><blockquote>Quote:<hr> The EBS Website and Brochure is up the left.<hr></blockquote><!--EZCODE QUOTE END-->

I don't understand this analogy. Are you accepting that the EBS is right ?

Brendan

Re: Saved From a Horrible Death

Clearly wrong! The Application Forms are correct. The Website and Brochure are wrong!:eek

I have sent the scarf to the dry cleaners to remove the mayonnaise stains.

Source of quote?

Rupert

<!--EZCODE BOLD START--> Since the start of this year the taxation of all UCITS, Unit Trusts, Life Funds, OIECs etc. etc. have been Gross for new customers.<!--EZCODE BOLD END-->

Where does this quote come from?

Back to Quinn Life

Way back at the start of this thread, I suggested comparing Quinn Life's and Irish Life's gross funds, to try to get behind the great pricing mystery.

The MoneyMate link provided by Rupert Bear doesn't actually do this, because the Irish Life funds quoted are net funds (indicated by the N after the fund name).

I have now had the chance to get the data, and the results are interesting. Irish Life's Europascope (gross) is down 26.4% for the year-to-date to end-October. Irish Life's Celticscope (gross) is down 7.6% for the same period.

Quinn Life's Euro Freeway Pension (ie a gross fund) is down 26.5% for the year-to-date to end-October. Quinn Life's Celtic Freeway Pension is down 8.1% for the same period.

My understanding is that these funds aim to track the same European and Irish indices. The results do not bear out the contention that Quinn Life is cheaper than Irish Life.

It seems to me there are only two possibilities - either (a) Quinn Life <!--EZCODE BOLD START--> isn't cheaper <!--EZCODE BOLD END--> than Irish Life, or (b) it is cheaper, but <!--EZCODE BOLD START--> it isn't as good at index tracking<!--EZCODE BOLD END--> (perhaps because of its small size) and that deficiency has more than outweighed the cost saving.

Re: Back to Quinn Life

The differences on the Eurostoxx trackers products are probably due to tracking error. I wouldn't expect these to persist.

The Quinn Celtic Freeway product doesn't track the ISEQ exactly. This is from the investment strategy section of the booklet:

<!--EZCODE QUOTE START--><blockquote>Quote:<hr> Shares are held in each of the largest 20 companies in the ISEQ... Please note that...the Celtic Freeway fund does not aim to track this index<hr></blockquote><!--EZCODE QUOTE END-->

I don't know about the Irish Life fund, but I suspect that its strategy is slightly different which would produce different, but similar, results.

Brendan

Re: Getting Ready to eat my Scarf

<!--EZCODE ITALIC START--> Boss<!--EZCODE ITALIC END-->,

This EBS mystery has really bamboozled me. I have been pouring over Finance Act 2000 all day.:x

The intention of FA2000 was to make all UCITS/Unit Trusts/Life Funds etc. Gross from January of this year.

The life industry asked for and received an exemption for business written <!--EZCODE UNDERLINE START-->before<!--EZCODE UNDERLINE END--> January 2001.

Unbelievably, it seems that Section 58 of FA2000 made the equivalent exemption for UCITS that <!--EZCODE BOLD START--> Funds<!--EZCODE BOLD END--> launched pre 2001 could remain Net.

This appears to be a key and anomalous distinction for these Funds can continue to attract New Business.

I am making further enquiries but at this stage it would seem that EBS may be right - they have the choice of tax options!:O

<!--EZCODE ITALIC START--> (Even they seem to be somewhat unconvinced at this amazing anomaly as we have seen that their Application Forms suggest that all new business should be Gross.)<!--EZCODE ITALIC END-->

I am totally shocked if this anomaly transpires to be the case:

(a) Very, Very few <!--EZCODE ITALIC START--> (even insiders)<!--EZCODE ITALIC END--> know about this anomaly.

(b) The EBS are themselves extremely coy about it - I would have thought Niall Brady of the Tribune would have loved this one.

(c) How did the life industry allow themselves to be stroked like this.

As to eating my scarf I am making preparations to that end whenever it returns from the cleaners. I will be careful this time round not to be wearing it.

Let me have one small little consolation prize - the EBS are no longer correct in regarding their management charge as any different from anyone else's from a tax point of view. A 1.4% charge is effectively 1.1% net in the hands of the punter irrespective of whether it is on an old style UCITS, a new style UCITS or a Gross Life Fund. EBS should cease this device of "netting" their charges.

As to their innefficiency, Application Forms notwithstanding, they have pulled a stroke on the mighty life industry. Why are they not shouting more about it?

Final, Final point, they should come into line with the life regulations and stop illustrating at 12% which is 2% in excess of the maximum permissible for life companies.:|

EBS

<!--EZCODE BOLD START--> Let me have one small little consolation prize - the EBS are no longer correct in regarding their management charge as any different from anyone else's from a tax point of view. A 1.4% charge is effectively 1.1% net in the hands of the punter irrespective of whether it is on an old style UCITS, a new style UCITS or a Gross Life Fund. EBS should cease this device of "netting" their charges.<!--EZCODE BOLD END-->

Actually, for what it's worth, they have different charges for the Investment/net (1.4% p.a.) and Mutual/gross (1.5% p.a.) funds (apart from the Tech fund which is 1.75% p.a. in both cases).

<!--EZCODE BOLD START--> Final, Final point, they should come into line with the life regulations and stop illustrating at 12% which is 2% in excess of the maximum permissible for life companies.<!--EZCODE BOLD END-->

Although the brochure uses illustrations based on 8% and 12% assumed growth, when I started a PIP with them in April of this year the illustrations were based on 7% and 9% assumed growth.

Bon appetit! :lol

Re: EBS

Hi Rupert

The EBS is not alone in having net funds.

Today I have received the brochure for the Bank of Ireland Asset Management Mutual Funds. On the cover, in prominent print is the expression "net version". The brochure was printed in May 2001. The application form says: <!--EZCODE QUOTE START--><blockquote>Quote:<hr> ...the above Mutual Funds pay tax at the rate of 20% on income and gains. You have no further liability...<hr></blockquote><!--EZCODE QUOTE END-->

I agree with the point about the EBS optimistic illustrations. They should comply with the spirit of the legislation.They have an ad in their shop window which is equally misleading.

Now that we have sorted that out I have started a new topic

Brendan

The Irish Insurance Federation is upset!

Rupert said: <!--EZCODE QUOTE START--><blockquote>Quote:<hr> The EBS are themselves extremely coy about it - I would have thought Niall Brady of the Tribune would have loved this one.<hr></blockquote><!--EZCODE QUOTE END-->

...and six days later there is an article from Niall Brady on this very topic.

A spokesman for the IIF said <!--EZCODE QUOTE START--><blockquote>Quote:<hr> We were surprised when this came to our knowledge because the life industry has gone through a lot of tax changes that were supposed to bring about a level playing field.<hr></blockquote><!--EZCODE QUOTE END-->

But I think that the IIF is missing the point. The advantage which the EBS and BoI Asset Management has over the other companies has nothing to do with the fact that they are not life companies. As I understand it, the life companies could well have set up these funds if they had wanted to. It just didn't suit them to set up products which were transparent in their charges.

Am I right Rupert?

Brendan

Re: Is the Boss Right?

First of all, whilst it has been proven beyond reasonable doubt in another topic that not everyone in the IT is AAM literate, it is fairly clear that NB of the Tribune is. 8)

Under Gross Roll Up charges <!--EZCODE UNDERLINE START-->are<!--EZCODE UNDERLINE END--> very transparent, I agree that under Net they weren't, at least as practised by the life companies.

But I think your very question proves that life companies were caught on the hop. If they had spotted this anomaly they would have set up these funds as they are no more transparent than the new Gross life funds anyway.

Maybe I'm missing <!--EZCODE UNDERLINE START-->your<!--EZCODE UNDERLINE END--> point, <!--EZCODE ITALIC START--> Boss<!--EZCODE ITALIC END-->.

Re: Is the Boss Right?

Hi Rupert

The IIF seemed to imply discrimination against life companies. My point is that the life companies could have set up these funds if they wanted to - they just didn't bother to do so for whatever reasons.

Life companies as such are not being discriminated against.

Brendan