Countrywide endowment... never mind mis-selling - a cr*p investment?

I've been paying around 148 per month into a Countrywide Assured endowment since June 1992, a total of 18,600. After receiving the usual letter about how it will not meet the target figure (it won't even come close, around 36% shortfall based on 6% returns from now on) I queried the current value of the policy - 14000. And it's not with-profits so no terminal bonuses or anything to look forward to. So over an 11 year period when the FTSE 100 has gone up 60% (and that's *after* the tech bubble, Sep 11th and the Iraq war) my endowment has managed to effectively go *down* 25%.

What I'm wondering is - how does any serious respectable investment company with a multi-million pound 'cautious balanced fund' manage to be so useless that they do worse than the FTSE, worse than a building society account, even worse than I could have done putting the money in a box under the bed, all during one of the greatest boom periods for equities for decades?! Never mind mis-selling, where's the compensation for fund mis-management and mis-investing! Does anyone have an endowment that's done worse? Should we start a cr*p endowment league table?!

------------------------------------------------- JD

Reply to
Jon Dunn
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You can't compare FTSE now with FTSE 11 years ago, because you didn't put the £18600 in as a lump sum at the outset. The FTSE has been going down in recent years, and if you go back over similar letters you'll have received in earlier years, you will probably find the "current value" then has actually been higher than £14000.

Also don't forget that not all the £148 is invested, some of it pays for life insurance.

FWIW, my £68pm endowment begun in March 1993 (Standard Life) now stands at a value roughly equivalent to yours (in relation to the payments), namely £6323 this February, and is predicting only a 14% shortfall at 6%.

In case it may be of interest, the February values from 1994 to 2003 are:

358, 657, 1558, 2492, 3636, 4660, 5555, 6524, 6789, and 6323.

Notice the effect of commission deductions in the first 2 years, i.e. the fund did not grow by anywhere near the annual contributions of £816. Also notice how in each year except the first two and the last two, value has grown by more than the £816pa contributions.

In the 2nd last the growth was only £265 and in the last year growth was actually -£466, bringing the value to less than it was two years earlier, by £201, despite £1632 having been contributed by me.

Just a couple of bad years. These things happen. I guess it's the same for you. Nothing to worry about if you keep your cool. After all, there'll be plenty of opportunity for recovery during the forthcoming recession...

Reply to
Ronald Raygun

I understand your distinction, and I realise that for the last 5 or 6 years, half of the policy life, my policy has been buying units at higher prices than they're worth now. And I've just received a letter which explains the charging mechanism; the first 2 years' premiums were completely eaten up by a 2300 initial management charge, and there are small monthly charges too. But the most the units have ever been worth was 280p in Jan 2001, so even if they were this price now the policy would *still* be worth less than I paid in!

I used to get these valuations annually but in the last 2-3 years (curiously) all I've been getting is the 'your endowment may not reach its target' letter and no indication of how many units I own or their current unit price. And at no time any figures to show relative performance of their fund. Having looked on their website I find their managed fund is 44th out of 109 in their sector, so not exactly sparkling but not terrible either (although in the last year they're 121st out of 197).

Agreed, although from year five a monthly 5% bonus on premiums covers this, so effectively I've been getting 'free' life assurance from then.

:-) No, no, there's a big recovery on the way, whoopee. To be honest I'm not inclined to leave this money in such a poorly performing fund. If they can't return even a small profit over the last 10 years then I don't have much hope of them doing so over the next 10, which are likely to be pretty challenging. Since I will not lose any terminal bonuses I'm considering encashing the policy and re-investing in some better-managed, better-performing funds with Fidelity, Scroders etc., maybe inside ISAs, maybe the new Fidelity 'target' fund which moves progressively into cash and bonds as the maturity date approaches. Would you not consider doing something similar?

Reply to
Jon Dunn

Reply to
jack king

Well, by doing so you would be writing off not just the relatively modest market losses of the past few years, but also the initial management fees would have been totally wasted.

Another option might be to look at different funds by the same provider. You should be able to switch without taking an early surrender penalty.

No, because my plan is partly with profits. Also, SL have introduced what they call their "Mortgage Endowment Promise", which guarantees to meet the target provided the funds grow at an average 6% after tax. Even if they grow at less than that, they will top up the payout to wipe out part of the shortfall. If I surrender or sell or make it paid up, the promise is withdrawn.

In fact, the predicted shortfall is 49% without the promise, and

14% with the promise, so staying put looks attractive.
Reply to
Ronald Raygun

They're wasted anyway, what I've got now is 6000 units worth 229p each and that's that, whether or not I paid 2k in fees to start with is no longer relevant, I'm not going to get it back even if I stick with Countrywide for the rest of the term. I've got a fund of 13740 to do something with, and I just think Fidelity or ABN Amro or Jupiter are more likely to return me a profit on this than Countrywide, given their past performance. It's painful to write off 2k in fees but it'll be worse to sit tight and watch my investment go nowhere for another 9 years.

There's no penalty; as I say the initial fees are paid and gone, and there are no bonuses to lose. And their other funds are as unspectacular as this one. Strange really as they're mostly managed by Schroders who have some very good funds.

Fair enough, what a generous deal, maybe I'll suggest that idea to Countrywide (although I notice the Guardian in Feb reported "Standard Life, Europe's biggest mutual insurance company, faces a potential bill of up to

4.8bn to honour the promises it made to 800,000 holders of endowment policies which are failing to hit their targets. Doubts are now being raised whether the Edinburgh-based insurer can afford to meet the promise in full, because its own financial strength is weakening. [snip] Standard Life also says it will only keep the promise if it has enough capital to set aside regular provisions to meet any shortfalls. The spokesman said: 'This isn't a guarantee. It's a promise, subject to us having the resources available.' " ).

Thanks for your thoughts.

Reply to
Jon Dunn

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