Abstract
Even more so than other long-term investment products in the UK, investment bonds appeal to an extremely narrow consumer base, with a very limited scope for expansion. Indeed, Mintel' s consumer research has revealed that only a small proportion of the population have even heard of an investment bond and that significantly less even have one. The rationale behind this is that nearly all sales are made via an intermediary and investment bonds are rarely promoted directly to private investors.
After bottoming out in 2005, the investment bond market has seen a steady, albeit small, increase in new business over the past two years. Much of the new business has been thanks to the unit-linked bond segment of the market, which has effectively taken over from with-profits to become the most popular bond type. Most recently, however, there has been a significant increase in the sale of income and growth bonds as providers have increased their guarantees, while turbulence in equity markets has also helped to make these and other less risky products more attractive. Nevertheless, despite the recent turnaround in investment bond sales, the demise of the with-profits segment of the market continues to haunt the market as a whole, as overall new sales are still only half of what they were in 2001.
This report examines the key issues facing the investment bond market, ranging from demographic and economic factors to the potential impact of the proposed changes in CGT treatment and competing long-term investment products. A Market Size section details changes in each segment of the investment bond market, while the report also identifies the key players and their performance within the market place. Finally, consumer research highlights attitudes and behaviour towards investment bonds and long term investing in general.
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