Middlesea Valletta Life Assurance Co. Ltd (MSV) has recently launched a new investment opportunity – MSV Investment Bond in foreign currency.
The new product is modeled on the existing Maltese lira version of the Investment Bond that has been extremely popular with investors.
The novel features of the foreign currency versions of the Investment Bond include:
• Three currency versions to choose from denominated in Euro, US dollar and GB sterling;
• A wider choice of funds.
Choice of currency
Each of the three currency versions offer a range of funds also denominated in the same currency – for example the Euro version of the Investment Bond offers a range of Euro-denominated funds.
Following Malta’s entry in the ERM II, MSV expects the largest demand to be registered for the Euro version. Indeed the product was developed in response to demand from the market for this type of product.
The Investment Bond enables investors who wish to take a position in one or more currencies and eliminate any currency risk between their preferred currency and the underlying investments, to do so by choosing the appropriate currency version of the Investment Bond.
Choice of funds
Each currency version offers a range of funds to suit the needs of investors.
Equity funds have historically proven to be the highest-performing type of investment fund. They do however tend to show a high degree of price fluctuation on a short-term basis. Financial advisors agree that in the long term equity provides the best security against the effects of inflation. To take one example from the funds available under the Investment Bond, the MSV Fidelity European Growth Fund, which invests predominantly in European shares, has delivered an annualised growth of 13.5 per cent between its start date (on 01/10/90) and 31 March 2005.
Bond funds (or fixed-interest assets funds), on the other hand are a more stable form of investment (relative to shares) but they have a lower potential for growth. They tend to show a moderate degree of price fluctuation. Taking another example, the MSV Fidelity Euro Bond Fund, which invests predominantly in highly secure European government bonds, has delivered an annualised growth of 7.2 per cent between its start date (on 22/10/90) and 31 March 2005.
Balanced and Target Funds invest in a mix of equity and bonds. Some balanced funds have a fixed percentage allocation between equity and bonds.
The asset mix of Target funds changes from ‘adventurous’ to ‘cautious’ as the target year approaches. With this approach investors do not need to worry about the need to rebalance their asset mix as they approach the time when they anticipate that they will need to withdraw the money because this is done by the fund manager directly.
Some of the key features of the investment bond:
100% Allocation
The full amount of the premium paid (after deduction of a nominal policy fee) is invested. In addition there is also no other indirect up-front charge through the operation of a bid/offer spread because units are purchased at the bid price.
Opportunity to balance the investment
Investors in the MSV Investment Bond can choose from a range of equity funds, fixed-interest assets funds and mixed funds managed by Fidelity Investments or Valletta Fund Management
Competitive charges
The charging structure of the Investment Bond is one based on exit charges rather than up-front charges so that the investor pays the charges on the way out rather than on the way into the investment. The exit charges applicable to the Investment Bond are on a sliding scale basis so that effectively the longer the investment is held, the smaller the exit charge paid by the investor. An added benefit is that the exit charges are waived entirely in the event of the death of the investor.
Preferential terms for larger investments
Investments of at least €(US$ or Stg)25,000 attract preferential terms in the form of a reduction in the charges.
Flexibility
Investment priorities may change with time and the Investment Bond addresses this need because it allows switching of the capital invested between different investment funds.
Launch offer
The launch of the Investment Bond is being accompanied by an Introductory Launch Offer.
Investors who make an investment in the Investment Bond during the month of June will automatically be entered into a lottery with the chance to win some fabulous prizes. The prizes are:
• 1st prize – Flyaway tour to London for seven nights for two persons;
• 2nd prize – Sony Home Surround system;
• 3rd prize – E100 (or equivalent in another currency) added to the investment.
In addition all new investors in June will be given a free ROBI puppet (until stocks last).
This is a reversible bull and bear puppet, a toy that many children will enjoy playing with. ROBI is not just a toy because it also contains an educational message tied to the investment market.
The bull and the bear are the two animals that are most closely associated with the stockmarket.
The bull is associated with periods in the market when share prices are rising and the bear is associated with periods in the market when share prices are falling. Investors in the stockmarket should be prepared to go through both bull and bear markets when they are investing on a long-term basis.