Closure of Guaranteed Profits Funds
09 Sep 2022
Closure of the Friends Provident International Limited Guaranteed Profits Funds (the “Closing Funds”)
The closing funds are a range of fixed maturity funds, designed to invest in a basket of equities, debt instruments and cash; the funds contain a guarantee that, should the funds be held to maturity, the holder would receive the highest bid price achieved by the fund during the term (the “Guaranteed Profits Price”).
On review, and as a result of prevailing market conditions and recent poor performance, it has been determined that the closing funds are no longer likely to provide investors with sufficient potential for future growth. As such, we have made the decision to close the funds.
The closure will take place between 12 and 23 December (the “Closure Period”) and policies and contracts will be switched to an alternative unit-linked investment fund (the “Default Receiving Funds”). The value of the switch will be based on the Guaranteed Profit Price during the closure period; as stated above, this price would ordinarily only be provided on maturity of the relevant GPF. The closure of the fund therefore removes the guarantee, however provides investors with the Guaranteed Profit Price ahead of the scheduled maturity.
GPFs maturing December 2022
GPFs scheduled to mature in December 2022 (D22 and F22) will not do so and will be closed during the closure period as part of this closure process.
Default Receiving Funds
In each case, we have selected a relevant multi-asset fund in the current fund range with a balanced allocation as DRF. We have selected these funds as they are the most similar to the GPFs in terms of asset and portfolio allocation, providing a similar mix of equities, debt instruments and cash. The exception is the single GPF denominated in Euro, for which we have selected a Euro money market fund as the DRF.
It should be noted that the selected DRFs do not provide a guarantee and, as such, are exposed to movements in the relevant investment markets.
|Closing Funds||Default Receiving Fund|
USD Guaranteed Profit Funds
(F22, F23, F24, F25, F26, F27, F28, F29, F30, F31, F32, F33, F34, F35, F36, F37 and F38)
|L76 Blackrock – SF Managed Index Portfolio Moderate (USD)|
GBP Guaranteed Profit Funds
(D22, D23, D24, D25, D26, D27, D28, D29, D30, D31, D32, D33, D34, D35, D36, D38 and D39)
|L73 Blackrock – SF Managed Index Portfolio Moderate (GBP)|
EUR Guaranteed Profit Fund
|L62 Fidelity Euro Cash Fund|
These changes will happen automatically. Policyholders do not need to take any action if they agree with the choice of Default Receiving Fund that we have selected.
However, the policyholder may choose to switch current holdings into a different fund in the FPIL range available to the policy or contract. This can be done at any time, but to override the transfer or redirection to the Default Receiving Fund that we have selected, alternative instructions must be received by 3pm UK time on 9 December 2022.
Please note, that if the the GPF is redeemed prior to the Effective Date the Guaranteed Profits Price will not be guaranteed. Instead the policyholder will receive the current bid price of the GPF in which they are invested.
A copy of the Policyholder Letter can be found opposite.