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Life insurer expands investment opportunities for DFMs

Canada Life has extended its segregated portfolio service (SPS) to a wider range of bonds.

The SPS provides clients with access to an offering of investment opportunities through Canada Life International (Isle of Man) and Canada Life International Assurance (Ireland) open architecture bonds.

The expansion will allow the option for discretionary fund managers (DFMs) to hold a much broader range of investments, which will create the opportunity for “greater diversification” and the potential to reduce expenses by “investing directly rather than through funds”, Canada Life said.

DFMs can also utilise their stock selection expertise within a tax-efficient bond wrapper, while also “creating true income portfolios, directly investing in gilts and other fixed interest assets”.

Reduce expenses

Neil Jones, tax and estate planning specialist at Canada Life, said: “While international investment bonds already have some exceptional tax-efficient benefits, opening up our wider range of solutions to the segregated portfolio service creates additional opportunities for our DFM partners.

“True discretionary management combined with an international bond is a very attractive solution for many.

“Clients can benefit from a much broader range of assets, including holding direct equities, corporate bonds and other fixed interest assets within the bond structure.

“Not only can this help DFMs create bespoke portfolios through a very tax-efficient wrapper, but also it has the potential to reduce expenses.”

The extended SPS product availability

Isle of Man (CLI) Ireland (CLIAI)
Premiere Account (Already available) Premiere Europe Account
Wealth Preservation Account Wealth Preservation Europe Account
Controlled Access Account International Portfolio Bond (Already available to existing business but closed to new business)
Estate Preservation Account
Inheritance Planning Account

Details of the scheme

The SPS is only available through a discretionary investment manager that has a suitable agreement in place with either Canada Life International (Isle of Man) or Canada Life International Assurance (Ireland).

Under current legislation, international bonds taken out by UK residents are subject to HM Revenue and Customs (HMRC) rules on permissible assets. These include investments such as:

  • Authorised unit trusts;
  • Investment trusts;
  • Collective investment schemes; and
  • Linked-life funds.

Canada Life said on its website: “Under the SPS, a discretionary investment manager is appointed by the investor and the manager is able to step outside the usual permissible assets rules, providing they can manage the portfolio without any influence from the policyholder or their professional adviser.

“This allows them to use a wider range of assets such as direct equities, corporate bonds and so on, alongside the usual range of permissible assets, while still meeting HMRC regulations for international bonds.”

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