Equity Bonds

Equity Bonds (or Insurance bonds investing exclusively in company shares) are comparable with unit trusts, except for the taxation differences.

Equity Bonds can be just as specialist as unit trusts, putting cash into sectors such as 'Emerging Markets' or investing for 'UK Income' or 'UK Growth'.

With Equity/Insurance bonds, most of the taxation is already taken care of before the investor receives any return. In other words, the taxation of a bond takes place within the fund - the insurance company pays both income and Capital gains tax (CGT) .

Worth pointing out is that switching between different funds within an Insurance Bond is frequently 'free of charge' and is not counted as a disposal for CGT purposes by the taxman.

They are therefore a useful tool for those people who wish to actively manage their investments.

See also: Insurance Bonds - overview , With-Profits bonds , Distribution Bonds , and Managed Bonds .

Last Updated: June 2007 © Moneyextra.com

MoneyExtra.com recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.