Doubts cast on AXA North
Research house Adviser Edge has warned that the popular AXA North product may have been oversold, saying many of the investment options offered in the product have a low chance of relative investment success.
Adviser Edge said the merits of the investment vary depending on the choice of term and asset allocation used in the strategy. The research house said that while a 10-year term with the most conservative strategy achieved a four star rating, all other combinations were rating as 3.5 or 3.75 stars.
According to researcher Geoff Watkins, quantitative testing of AXA North suggests it has been oversold.
“Overall quantitative results modelling indicated that only very long and/or strong bull markets give rise to performance that is better than that of a simple fixed interest fund,” the research house said.
“The combination of shorter-term cycles in the equity market and ongoing annual fees in the AXA North product depressed returns over long periods, particularly for the 15 and 20-year alternatives.
Furthermore, Adviser Edge found that the five to seven-year guarantee alternatives rarely provide value to an investor, yet require the annual fees to be paid for the full term.”
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