Personal Finance: Under the spotlight/GT Global's UK Key trends fund

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Indy Lifestyle Online
The product: GT Global's UK Key Trends Fund.

The deal: Invest at least pounds 1,000 (or pounds 500 through a PEP) and GT Global will invest your money "thematically".

This is a fancy way of saying they will put it in companies which can tap into themes (trends) such as the boom in financial services, the proliferation of media, or expanding private health care.

Three-quarters of the money goes into listed UK companies deemed to profit from these trends. The rest goes into a similar, world-wide fund.

Plus points: If the fund managers get it right, the trendy stock-picking will yield handsome rewards.

GT Global, which manages pounds 10bn world-wide, has carved out a niche by identifying the trends and has done well.

A similar fund in Canada returned 27.8 per cent last year - against just 20.6 per cent for its peers.

The fund managers at GT have a rigorous screening process to eliminate fly-by-night companies from their investments. Most GT funds have performed consistently above average in recent years, though there have been some notable exceptions.

Drawbacks and risks: Trends are nothing new. In the early Seventies an investment vehicle called The Motorway Trust was set up. The theme was that motorways would be put up all over the country - it was a boom industry. The trust folded after a few years.

GT Global themes include financial services, which are likely to boom because states will not be able to afford insurance, but individuals supposedly will; and an ageing population, which is predicted to boost demand for sophisticated drugs and innovative therapies.

These trends, however, are no more irrefutable than the growth of motorways appeared to be in the Seventies.

Charges include a 5 per cent initial charge (which is average) and a 1.5 per cent annual management fee (on the high side).

Verdict: Well researched, but only for the wary.

Marks out of five: Two, though the fund may still present an attraction for inveterate risk-lovers.