Watchdog goes soft on commission

Article Abstract:

Commission charges for UK mutual funds already bought by investors could be raised in order to prevent financial advisers from persuading investors to sell funds to gain commission. Advisers are tempted to persuade investors to switch funds since business volume is low, and advisers gain commission if investors switch funds. The regulator for the industry is considering a change to allow charges to rise for funds already sold. Investors are thus likely to have to pay more in fees. Annual fees have already risen in the five years to 1995, and this could affect corporate bond personal equity plans, a new investment vehicle.

Investment Advisory Services, Investment Advice, Prices and rates, Investment advisers

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Beware the bond Pep bandwagon

Article Abstract:

UK investors are being offered corporate bond personal equity plans (Peps) following a change in tax regulations. Over 20 such funds have been launched and investors should consider these carefully before making a decision. They should assess whether they need income, for example to supplement a pension, and the level of risk they are prepared to accept. High income tends to be achieved at the expense of capital growth and equities are better vehicles for achieving capital growth.

Economic aspects, Credit market, Credit markets

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What to look out for

Article Abstract:

Investors should choose corporate bond fund personal equity plans (Peps) if they are seeking a high yield. Equity funds and balanced funds may be better vehicles for long term investments where total return is important. Investors moving from deposit accounts may be advised to choose low-risk bond funds despite the lower rates of interest. Front end charging is common, so investments should be longer term in order to avoid losing capital in charges.

Taxation, Securities, Securities taxes

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