Protected Growth Bond

Overview
Explained
FAQ
Toolkit

Overview

The MetLife Protected Growth Bond allows your clients to benefit from the potential of daily investment growth whilst offering protection against market falls. Clients can choose the level of protection to suit their needs from 70%, 80% or 90%.

At a glance

Exposure to the stock market and the opportunity for greater investment growth
Peace of mind, knowing the unit price can never drop below thechosen level of protection
Three levels of investment protection
Invest for as long or short a period of time as needed
Lock-in a level of growth daily Available offshore for tax efficiency
Use with a range of trusts for effective estate planning.

Explained

A lock-in a day keeps uncertainty away

FAQ

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What is the Protected Growth Bond?

It is a single premium, unit-linked, whole of life investment Bond that allows clients to benefit from investing in equities whilst also providing a level of protection against market falls. This protection is provided through one or more of MetLife’s Protected Growth Funds. Depending upon the level of protection selected, our Protected Growth Funds guarantee that the unit price will not fall below 70%, 80% or 90% of the fund’s highest-ever unit price.

What is the Unit Price?

This is the actual price of each unit in the fund. It’s value can go down as well as up. This is the price your client will buy and sell at.

What is the Protected Price?

Depending on which Protected Growth Fund you choose, 70%, 80% or 90%, the protected price is the percentage of the highest ever unit price. For example, on the 80% protected fund, if the unit price is £1.00 the protected price is £0.80. If the unit price increases to £1.30, the protected price will grow to £1.04. If the unit price subsequently falls, the protected price will remain at £1.04.

Is all of my client’s investment protected?

No. There are three levels of protection, 70%, 80% and 90% of the highest ever unit value. Depending on which the client chooses and when they invest, they will have a protected price which will be based on this percentage. It is possible that a client can invest in a fund where the protected price is a higher percentage than the selected level of protection (because the unit price has fallen).

How does MetLife provide the protection?

The Protected Growth Bond protects a percentage of the highest ever unit price of the fund. This is done by switching between equities and cash to ensure that the fund unit price does not fall below the protected price. If the value of the equity investment increases, we move money from cash to equities (up to the maximum permitted for that fund) to ensure your clients gain the most advantage of the rising market. If the value of the unit price decreases, money is moved from equities to cash to protect the investment and provide more stability

What happens if the unit price falls to the protected price?

In extreme market conditions, such as a significant fall in equity markets, the unit price could fall to the protected price and the fund may become entirely invested in cash. We call this ‘cash protection’ meaning there would be no further exposure to equities. This would usually happen before the unit price reaches the protected price as the switching mechanism between cash and equities aims to ensure that the unit price should never fall below the protected price. The client will then receive the Protected Price when they cash in or transfer their holding.

The unit price will then be protected against any further market falls, but will be unable to benefit from any market recovery. If ‘cash protection’ should occur, we will write to your client with details of alternative investment options available at that time.