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Bold Living annuity

20 Sep 2016


A Bold approach to retirement investment

JOHANNESBURG, Tuesday, 20 September 2016 – Another innovative product is being brought to the market by Liberty this week. Called Bold, it’s the first Linked Investment Service Provider (LISP) style product to offer a quarterly high water mark return guarantee.

“We have combined the complete flexibility to choose any mix of funds at any time from a broad range of asset managers that LISP style products offer, with a high water mark guarantee on the returns one’s choice generates, that only a life company can provide. This can only be done by creating a hybrid LISP/Life company product,” says David Lloyd, Managing Director for Innovation at Liberty.

Bold is a living annuity that features a five year 80% quarterly high water mark return guarantee, which can be stopped or restarted at any time, or rolled over after five years. The return guarantee applies both to income withdrawals and the return after five years.

“As a customer-centric organisation, we researched very carefully what retiring customers were looking for. We found that these customers wanted to harness the power of the stock market to increase both their retirement standard of living and what legacy they would leave their heirs. But there was a problem – although these customers knew this, they were also only too aware that the stock market can dip, sometimes sharply. When they were earning and saving for their retirement they knew there were a lot of opportunities to make up for these dips, but once retired, they simply don’t have the same options to counteract market setbacks. As a result, their investment choices in retirement were just too conservative, meaning lower expected returns. Indeed our research showed that many were in danger of underperforming the fixed life annuity alternative,” says Lloyd.

Lloyd adds, “We set out to change this, giving ourselves the objective to allow retiring investors to take the risks they needed to, without losing any of the flexibility of the LISP style proposition. It’s very exciting to be able to tell investors and advisers that with Bold they can make any choice of funds and change at any time, but once their selection produces an aggregate return of 25% from outset they can sleep peacefully knowing they cannot experience a negative return for the rest of the guarantee period, as measured from the outset - irrespective of which funds they may choose going forward.”

“Our next challenge was that a quarterly high water mark guarantee is very valuable and therefore can be prohibitively expensive. For example, single funds that feature something similar can typically carry costs of 3% to 4% per annum.”

Lloyd says that every quarter Bold looks at the cumulative return the investors’ aggregate choice of funds has achieved. If a new return high is achieved, the quarterly high water mark set at 80% of that high is increased. The quarterly high water mark never reduces. “This is an incredibly valuable feature,” he says.

Innovative approach

“Once again we have been innovative in our approach. This time in the way we charge for the guarantee. There is a once off charge of just 1% due on day one and there’s only a further charge if and when an investor’s aggregate return exceeds 14% in any year. If it does, then at the end of the year we deduct 20% of any growth in excess of the 14%. But, investors can switch off the guarantee at any time and when they do, if their return that year doesn’t exceed the 14%, then they pay nothing (if it does exceed then they just pay 20% of the excess upon exiting the guarantee). This means full flexibility is maintained and investors only really pay for the performance guarantee once it becomes particularly valuable.”

This is the third such hybrid investment product from Liberty created under the leadership of Lloyd, who was behind the ‘pay-for-advice only when it performs’ investment product, Liberty Evolve, and Liberty Agile, the only RA that provides a guaranteed retirement income. Lloyd also created Liberty’s unique wealth reporting system called FullView.

“Consult a Liberty Financial adviser or Broker to get more information on Bold,” advises Lloyd.  




Fig 1: Illustration on cumulative aggregate return and return guarantee
When your aggregate return reaches 25percent, the 80percent high-water mark will have risen to the level of your entire initial capital in other words, the guarantee at that stage ensures no loss on the initial amount you invested (a 20-percent loss on 125percent = 100percent).

For media queries, please contact:

Babazile Mbetse
Head of Public Relations
Liberty: Individual Arrangements
Tel: 011 408 3690/ 082 417 2109  

Thanyani Muthakhi
Communication Manager
Liberty: Individual Arrangements
Tel: 011 408 3690/ 072 217 1195

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Liberty Group Limited (Reg. no 1957/002788/06) is a licensed Insurer and an Authorised Financial Services Provider (no 2409).