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should I bail out of a sad with-profits bond?

I took out a SunLife 'with-profits' bond as part of my SIPP in april 2001. It was a single contribution of 100k. The current "valuation" is around

115k, but with an MVA of -35k! There is also an early surrender penalty of 3% (sliding down from 5% to 0% over five years).

I'm having trouble getting straight advice from either my IFA (who manages the SIPP) or from AXA/Sunlife. The question seems simple to me: Is it better to take the medicine now and get out of this bond with 76k and invest that again in something else? Or is it better to sit tight, anticipating that the MVA will be gradually removed - in effect yielding good growth on the 76k I still have? Sunlife did advise that the MVA had been applied from around March of this year and had not changed much since then. They were unable to give my any message to encourage me to leave the remaining money with them.

What does anyone think I should do? cash in to avoid futher loss, or sit tight? Is there anywhere I can get general information on the trends of these MVAs? 30% seems enormous, is it unusual even in these difficult days?

many thanks for any thoughts

John

Reply to
john
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I don't know much about wp but it seems too early to take that decision for any investment. More so as commission on wp bonds is much greater in the early years

- see your documentation. I hope you haven't got one of the higher charging SIPPs. What were the reasons for taking out a wp bond as opposed to any other investment ? What were your objectives ? The MVA does seem high - 30%? - the equity markets have dropped by approx 22% over the period. Did you pay your advisor a fixed fee or by commission ? If commission you have asked you advisor how much they are making out of you haven't you ?

Why should you expect any kind of unbiased advice from them (or from any commission based financial advisor for that matter).

Personally I think you should stick with it and review at 5 years.

Search the uk.finance archive as MVA rates have come up before -

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Daytona

Reply to
gspark

Hi this sort of investment is certainly not short term and too years is definitely short term. I would stick with the investment you have got. The markets, although slow are going upward and the MVA will eventually be dropped or decreased. You would suffer losses for a long time if you were to change now, especially as you would probably have to pay setting up fees all over again.

cheers

Reply to
Peter Bottomley

thanks for the advice on this. to answer the questions raised, the bond was taken out to provide some lower risk offset to other commercial property investment in the sipp. it is not intended to use the money until my retirement date in 2007. so I think the advice is sound, sit tight and hope the MVA is reduced or removed. regarding the point on commissions, the IFA concerned did not take the set up comm but rolled it into the fund, he gets his returns from the fees on the sipp overall, which I find reasonable.

happy christmas John

Reply to
john

No problem - hope it works out for a happy retirement !

Daytona

Reply to
gspark

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