Quinn Life Freeway Funds

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nelly123

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Hi,

Just a few questions about Quinn Life Freeway Funds please, as I am new to investing.

First off, these savings funds are structured as life assurance policies, what does this mean in comparison to a regular savings fund?

What is the difference with funds which buy "units" as opposed to buying shares directly?

It states that the exit tax on encashment is 23%, but I thought I saw something before about life assurance policies being taxed @ 40%, which is correct? Any other tax issues?

How are dividends handled, are they reinvested back into the fund and are you required to pay income tax separately on these?

These may be basic questions but one can only learn by asking. Really would appreciate any feedback.

Thanks
 
nelly123 said:
First off, these savings funds are structured as life assurance policies, what does this mean in comparison to a regular savings fund?
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No different. Most if not all unit linked funds are structured as life assurance policies.
What is the difference with funds which buy "units" as opposed to buying shares directly?
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Have a read of the AAM and IFSRA guides to savings and investments linked from the key topics thread at the top of this forum.
It states that the exit tax on encashment is 23%, but I thought I saw something before about life assurance policies being taxed @ 40%, which is correct? Any other tax issues?
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Tax on most or all unit linked funds is 23% of any growth automatically deducted on exit with no other tax liability.
How are dividends handled, are they reinvested back into the fund and are you required to pay income tax separately on these?
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They are invested back into the fund. Tax is normally taken care of.
 
Thanks for the advice

I noticed revenue are involved in some form of clampdown relating to life assurance policies. Does this mean I would need to inform them if I opened a fund, as in declare the fund on some tax form?

Also, can I invest different amounts at different times as I see fit or does it have to be regular fixed amounts?

Is it generally better to split the % invested between several funds or stick to 1 or 2 and hold out for a positive return?
I know this question is a matter of personal opinion, but just wondering what experience others may have encountered with these funds.

Thanks again
 
nelly123 said:
I noticed revenue are involved in some form of clampdown relating to life assurance policies. Does this mean I would need to inform them if I opened a fund, as in declare the fund on some tax form?
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No.
Also, can I invest different amounts at different times as I see fit or does it have to be regular fixed amounts?
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Depends on the fund/provider but I think that QL allow arbitrary lump sum top-ups whenever you like (maybe subject to some minimum amount).
Is it generally better to split the % invested between several funds or stick to 1 or 2 and hold out for a positive return?
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Depends on your investment goals, timeframe, attitude to risk/volatility. No easy answer without more details and no general one size fits all answer. For pure investment advice on which funds to select etc. it's a good idea to talk to an independent, professional advisor.
 
Nelly the person who is selling this product to you should be answering these questions for you.

The reason most are sold through a life assurance package is that the seller is not regulated to sell you a unit trust product they can only sell unit linked products because they are life companies. The ownership structure is slightly different between a unit trust product where you own the units and a unit linked where the company owns the shares. My understanding is that on Death units in a unit trust can be transferred as part of the estate whereas a unit-linked product is sold immediately on death. Obliviously there must be some additional expense in a unit-linked product as it provides some sort of life policy above a unit trust package.

There is a big difference between a unitised structure and owning shares directly. Generally you will get far greater diversification in a unit fund then a segregated unless you are loaded and can afford a bespoke segregated fund. Your Tax in a unit fund (Rollup) is at 23% exit tax only on encashment the dives are repaid back into the fund and only on encashment will the tax hit. Segregated funds are talked at Marginal rate on dividends and then CGT at 20% on gains. You also have the inconvenience of annual tax returns, which can be expensive.

Be extremely vigilant on costs they might tell you, you an make regular payment but they will fleece you blind on charges on them 5 % is not uncommon. So you are automatically down 5% plus annual manage mat charge of aprox 1.5%. Other expenses can be another .5%.

Ask are there any upfront charges?
Any Exit Charges?
Total Expense ratio for Fund? ( Annual mgt fee + other exp Audit, Trustee etc)
NB. Regular premium what are the charges for these.

IMHO unit funds are far better if you have a lump sum to kick them off.
 
Taximan said:
....

Be extremely vigilant on costs they might tell you, you an make regular payment but they will fleece you blind on charges on them 5 % is not uncommon. So you are automatically down 5% plus annual manage mat charge of aprox 1.5%. Other expenses can be another .5%.

Ask are there any upfront charges?
Any Exit Charges?
Total Expense ratio for Fund? ( Annual mgt fee + other exp Audit, Trustee etc)
NB. Regular premium what are the charges for these.
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I would agree with Taximan that you need to watch charges carefully when investing. I do think that the Quinn Freeway products come in at the lower end of the scale, and would not be as expensive as those quoted above.
 
"Be extremely vigilant on costs they might tell you, you an make regular payment but they will fleece you blind on charges on them 5 % is not uncommon. So you are automatically down 5% plus annual manage mat charge of aprox 1.5%. Other expenses can be another .5%."

I've recently opened the childs savings policy with Quinn Life and did my research before hand as I'd the heard horror stories of hidden charges! I finally went with Quinn Life because they were providing the type of product I wanted but they also confirmed they have no hidden charges and the 1 or 1.2% charges are all you will incur - no additional charges i.e upfront charges, exit charges. I think you may have to pay for switching funds after you have done a certain amount but thats it. I'm putting money in monthly and there are no charges.

I've been very impressed with any communication I've had with Quinn Life and their online service has been great for checking the performance & doing a switch between funds.
 
Taximan said:
Nelly the person who is selling this product to you should be answering these questions for you.
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But if the person selling the product is a tied agent, and I don't think that QL funds are sold via brokers/intermediaries, then don't expect independent, professional advice from them as opposed to hopefully straight answers to straight questions about their specific products.
 
Taximan said:
IMHO unit funds are far better if you have a lump sum to kick them off.
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Why? If there is no per contribution charge (as with QL for example) then there is no cost advantage in making a single lump sum contribution versus drip feeding it over a period of time. Of course the lump sum approach means that the total amount is invested for longer but the drip feeding approach may benefit from euro cost averaging...
 
In relation to Taximan's post he seemed to be talking in very generic terms rather than in reference to the QL product specifically.

As ClubMan pointed out with QL there is no charge per contribution so you can build up your "lump sum" over time (should you not have it initally) while still gaining the (possible) advantage of having it invested for that time and also gaining from the potential cost averagings.
 
Just one thing - the minimum contribution amounts with QL are €1,270 (lump sums) and €51 (monthly).
 
Re. their new 'Pride And Joy' savings plans, are these in any way different from what is already on offer via Freeway?

I know there is a €25 bonus when sigining up, but is that it?

(I will start a separate thread if needed)
 
ClubMan said:
Can't find any mention of this product on their website. Do you have any links?
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Nope. Got a flyer in the post on Friday. Lot of bumpf about €25 free, but no mention of other features. Aimed at investing for children, but Freeway was already suitable enough on its own IMHO.

Seems like a gimmick.
 
ClubMan said:
Can't find any mention of this product on their website. Do you have any links?
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No. I have access to my policy through the My Quinn Life section which only policyholders have access to.

I initially read about the "Pride n Joy" product in the paper and rang about it. I was told the website is being completely updated so you'll be able to view it soon. When I rang they sent me "Pride n Joy" brochure instead with complete details.
 
Thanks to all who responded. Much appreciated.

Now a few more questions please.

I see each QL fund is comprised of a select number of companies related to a specific industry sector. Now, say the fund comprises 10 companies, does it take the performance of each company & average out results between the 10 to give the performance chart OR does it take the performance of the specific sector, eg "biotech", as a whole, OR does it just track the performance of the exchange?, if so, how do companies relate to overall results if it just follows the exchange?
Hope this makes sense.

Also, if I placed say 2,000 in the fund and after about 2 years it was still the same value (no profit) would I still be charged 23% tax on encashment or is it only taxed on profit? eg, if it grew to a value of 3,000, is 23% tax applied to 1,000 profit or the entire 3,000?

Thanks
 
Total Expense Ratio is a term used for what are usually listed funds. The total charges on quinn funds are as shown in the charges section of the website i.e. 1% on Euro Freeway. I checked this before investing.

Many of the Quinn funds are relatively new and indeed the UK fund was only launched in June this year. Given this, it would be impossible for them to show any real trend on their funds. They make it clear in their promotional material that the graphs are for the underlying indices so I don't see the issue. As long as they are fully upfront and given they are index tracking the information obtained from the indices performance over eight years is more informative to the customer than showing a graph of a fund that is 0-3yrs established.

Exit tax is calculated on the average profit. In order words if you encash 1/2 value, 1/2 of the original total of investments is allocated to this. Exit tax has different rules for its calculation than the calculation of the CGT on the sale of shares.
 
bocade said:
Total Expense Ratio is a term used for what are usually listed funds. The total charges on quinn funds are as shown in the charges section of the website i.e. 1% on Euro Freeway. I checked this before investing.
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The Total Expense Ratio(TER) is more than just the annual management fee, it includes all expenses incurred by the fund and reflected in the unit price. More discussion here and elsewhere on AAM.
 
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