Zurich Prisma funds

Hi.
I am eager to learn of any informed opinions on these funds.

I am a civil servant. I currently have structured my avcs to attain their maximum benifit upon retirement (circa 6 yrs).
Cornmarket have informed me that 115 k is the max tax free lump sum attainable, upon retirement. This is the combined value of my avcs and my tax free lump sum gratuity. I'm assuming that this is accurate.

I have another 70 k in a cr Union account.
Myself and my wife have agreed that we keep this as a 3rd level education fund. Our eldest child will hopefully be attending 3rd level in 3-4 yrs time.

Cornmarket have suggested we invest these funds on a monthly basis into a Zurich investment plan. Namely the Prisma 3 and 4 plans.

These are unit link saving plans.
Some of the conditions are -

Need to maintain a minimum of 2.5k.
Plan is subject to an exit tax of 41%.
Obviously subject to dirt.
Setup fee of €375.
€20 flat rate for a single withdrawal.
Maintenance charge of 1.5% of the fund value per month.
The fund is not tax writable.

Is this a good option??

My limited financial knowledge suggests that there are a hell of a lot of associated charges involved.

Is there a better option out there for a 5 Yr education saving fund at present?

Appreciate any feedback.

Thanks.

You could do much better than that. Try an execution only broker. prsa.ie is one I have used and they offer a better deal than cornmarket have offered you.

I’ve a lump sum split between Prisma 4 and 5. Similar timeline in mind to you. Charges are not as hefty as the ones you were quoted. Also you mention DIRT. That does not apply. 41%% exit tax is the hit you take.

Shop around. Invesco are good to deal with.

Agree fully with @bstop here - you'll get a much better deal on charges elsewhere.

I'm not sure I'd bother with a unit-linked plan at all for an investment period as short as you're looking at and for a task as important as college fees. If there's a big collapse in fund values just before you need to draw them down, do you tell your child to defer college for a couple of years while you wait for a recovery?

I don't like the suggestion of Prisma 3 for this purpose. If we look at what Cornmarket were trying to sell you.

• 1% Government levy gets deducted first.
• Then €375 setup fee.
• Annual charge of 1.5%.
• Exit Tax of 41% on growth

Since it was launched in 2013, actual returns on Prisma 3 to 31/3/2022 have averaged 3.6% per year. Some years better; some years worse. Past performance is not a guide to future returns etc.

But knock off 1.5% annual charge and you're down to 2.1% per year on average. Then knock off Exit Tax at 41% off your growth.

You can get risk-free Solidarity Bonds from State Savings via any Post Office, paying 0.5% AER tax free after 4 years or 0.59% AER tax free after 5 years.

Given that Prisma 3 involves putting your capital at risk to some extent, I would question if you're getting a sufficient extra return over State Savings to justify that risk.

Dave Vanian said:

Agree fully with @bstop here - you'll get a much better deal on charges elsewhere.

I'm not sure I'd bother with a unit-linked plan at all for an investment period as short as you're looking at and for a task as important as college fees. If there's a big collapse in fund values just before you need to draw them down, do you tell your child to defer college for a couple of years while you wait for a recovery?

I don't like the suggestion of Prisma 3 for this purpose. If we look at what Cornmarket were trying to sell you.

• 1% Government levy gets deducted first.
• Then €375 setup fee.
• Annual charge of 1.5%.
• Exit Tax of 41% on growth

Since it was launched in 2013, actual returns on Prisma 3 to 31/3/2022 have averaged 3.6% per year. Some years better; some years worse. Past performance is not a guide to future returns etc.

But knock off 1.5% annual charge and you're down to 2.1% per year on average. Then knock off Exit Tax at 41% off your growth.

You can get risk-free Solidarity Bonds from State Savings via any Post Office, paying 0.5% AER tax free after 4 years or 0.59% AER tax free after 5 years.

Given that Prisma 3 involves putting your capital at risk to some extent, I would question if you're getting a sufficient extra return over State Savings to justify that risk.

Click to expand...

Dave,
Would I be right in saying that in highlighting the Prisma 3 fund, you're picking on the worst of the funds mentioned?

noproblem said:

Dave,
Would I be right in saying that in highlighting the Prisma 3 fund, you're picking on the worst of the funds mentioned?

Click to expand...

I'm not picking on the funds. As Risk 4 or Risk 5 actively-managed multi-asset funds go, Prisma are good examples of the breed. Good for long-term pension products or longer-term investments where they match the client's risk profile and requirements. What I said was that I don't agree with them being recommended for this purpose, i.e. a high-charge product, a short investment duration and a need to cash in on a fixed date.

The other one - Prisma 4 - has better past performance with greater risk/volatility. Not great for a relatively short time period where there is a need to draw down the funds on a fixed date. If it happens that the higher-risk fund drops substantially in value shortly before the funds are needed to pay the college fees, it could leave the OP in a tight spot.

Prisma 4 is categorised by Zurich Life as a Risk 5 on the ESME 1 to 7 risk (volatility) scale. Zurich Life themselves describe Risk 5 as...

• '5 - Medium to high risk' investor: likely to understand that the investment can go down and up sharply with the potential for greater returns over the long-term.

To me, that doesn't sound like a suitable recommendation for someone thinking about taking money out of the Credit Union that's earmarked for college fees.

As a general rule, I'd be more inclined to recommend funds such as these in circumstances where the client has more flexibility in terms of when they cash so that if there is a drop in values they can wait for a year or two for a recovery.

The recommendation is self-serving and ridiculous.

The time horizon is too short to take on investment risk, but there’s no commission to be had for that advice.

Keep it in cash and get on with your life.

Hi guys
Sorry for the slow response to all the advise. I thought I'd set up an email alert but obviously neglected to do so.

There seems to be a prevalent consensus among you regarding the wisdom of these funds for my financial needs down the line.

To summarize, am I correct in saying that this type of fund doesn't really fit my timeline (circa 5yrs)?

Also too risky in the current volatile global situation?

Play it safe, basically....

scuba05 said:

To summarize, am I correct in saying that this type of fund doesn't really fit my timeline (circa 5yrs)?

Click to expand...

In my opinion, yes, coupled with the fact that you have a specific requirement to withdraw the funds for an important purpose on a specific date. Unless you have other savings to pay the college fees, you don't have the luxury of being able to defer the withdrawal for a couple of years to wait for a recovery if there's a fall in values shortly before you need them.

Apologies for hijacking this old thread.....
What would anyone recommend for a PRSA AVC with a 7 year timeline...
- Prisma 3 - 100%
- Prisma 3 - 50%; Balanced - 50% (or any other mix % ?)
- Balanced - 100%

Or some other strategy....

redstar said:

Apologies for hijacking this old thread.....
What would anyone recommend for a PRSA AVC with a 7 year timeline...
- Prisma 3 - 100%
- Prisma 3 - 50%; Balanced - 50% (or any other mix % ?)
- Balanced - 100%

Or some other strategy....

Click to expand...

If you are with Zurich, then you have a wide choice of funds to choose from, not just the Prisma funds

https://www.zurich.ie/funds/fund-price-calculator/

I've a mix of Top Tech, Dividend growth, European select, Prisma 4+5 and 5 star Americas and I review yearly. Changes within the Zurich suite are free.
It really depends on the risk you like and the timeline. I'm 7-10 years from retirement, but I hope to live many more years than that, so my timeline on funds is currently 10-20years.

redstar said:

Apologies for hijacking this old thread.....
What would anyone recommend for a PRSA AVC with a 7 year timeline...
- Prisma 3 - 100%
- Prisma 3 - 50%; Balanced - 50% (or any other mix % ?)
- Balanced - 100%

Or some other strategy....

Click to expand...

To be honest, I’d be inclined to be thinking about what assets I want to be in at the point of retirement.

Will you require cash?
If so how much ?
What assets, funds, retirement benefits you are likely to be leaning towards at that point.
Your pension investments funds should now start to reflect those probabilities.

Perhaps a better starting point.

You can tweak the funds again a bit nearer to retirement to build up a bit of cash for example.