Zenith has reiterated its Highly Recommended rating on Austock Life Imputation Bonds (AIB).
AIB’s are Insurance Bond whose tax-paid investment structure means that tax on any returns (income and capital growth) generated within its underlying investment portfolios is paid internally within the Imputation Bond in a similar way to superannuation products.
This means that Austock Life meets tax payments and reporting obligations on investment income during the Bond’s accumulation phase, instead of the tax annually being paid and reported by Bond owners.
Zenith’s View
Investment returns are reinvested during the life of the investment meaning earnings have no impact on personal taxation while the Imputation Bond is held given that no taxable income is received. As a result, this provides an excellent, low maintenance investment vehicle for high marginal tax rate (MTR) payers to accumulate wealth as it avoids the leakage from income tax at the investor’s MTR.
In Zenith’s opinion, the structure of Insurance Bonds provides an extensive set of applications for tax planning, financial planning, estate planning and education funding strategies with the AIB investment menu providing plenty of flexibility.
We also have a high opinion of the quality of the management personnel and operations behind the management of the Bonds that provides Zenith with a high level of confidence in the product. Since our last review the AIB has undergone further enhancement with an expanded investment menu to 28 options providing a well-diversified range of investment portfolios and underlying manager choices.
It should be noted that the Zenith rating applies to the Austock Imputation Bond product structure only, not its underlying investment options.
While Zenith has issued ratings on some of the underlying managed funds which form the Bonds investment menu, these ratings are not relevant to the Imputation Bond rating and are for information only and current as at the date the rating was issued. Potential investors are advised to check the currency of Zenith ratings of the underlying funds.
