Personal Equity Plans: Self-select: for the experienced only

WHEN it comes to choosing a PEP, the vast majority of investors will opt for a PEP whose investments are managed for them. Few of us have the knowledge and expertise of a professional investment manager, so we would rather invest in a ready-made portfolio.

But experienced investors who want to build up their own portfolio can do so with a self-select PEP. To do this, you still need a PEP manager to administer the scheme and deal with the Inland Revenue. Apart from this, it is up to you decide what investments go into the PEP, subject to the rules.

You can put up to pounds 6,000 in a general self-select PEP and pounds 3,000 into a single-company PEP in any one tax year. You can only invest in one company's shares in a single-company PEP. A general PEP can invest in unit trusts, investment trusts, open ended investment companies (Oeics), shares, corporate bonds and gilts.

"Self-select PEPs offer great flexibility and choice, but are only suitable for experienced investors," says Alastair Conway, managing director of Clark Conway, independent financial advisers. "These PEPs are only for those who want to buy individual shares and be proactive in the management of their portfolio. Around 99 per cent of our clients prefer to go down the managed PEP route."

Around 50 PEP managers, mainly stockbrokers and the stockbroking arms of the banks, offer self-select PEPs. Most can be run over the telephone. Typically, there is no initial charge for setting up the PEP, although a few do charge up to 3 per cent. But all have an annual management fee and impose dealing charges when you buy and sell investments. These vary a lot.

Usually there is a minimum investment required on self-select PEPs. While Sharelink requires pounds 250, others want you to invest pounds 1,000 or more.

Some PEPs offer a monthly investment facility, so you can save on a regular basis. If you take this route, check the minimum dealing fee as you do not want to end up paying pounds 15 in charges each month when you are only investing pounds 50 a month.

A number of PEP managers have a maximum dealing charge, which can be economical if you are buying large parcels of shares. As well as charges you should check what you can put in the self-select PEP. Bradford & Bingley offers a low-cost PEP with no initial charge, an annual fee of 0.5 per cent and a dealing charge of 0.25 per cent. But you can only put FT-SE 100 shares in the PEP. Shares are bought and sold once a week so this PEP is not suitable if you plan to be an active trader. Lloyds Bank's self-select PEP offers two dealing facilities: an instant, immediate service and a bulk-buying service. Immediate dealing costs are 1.5 per cent, and the bulk-buying service where shares are bought and sold once a fortnight, costs 0.5 per cent.

The immediate dealing charge on pounds 6,000 of shares in a single company would be capped at pounds 75, whereas if you used the bulk-buying service it would cost pounds 30. On top of this, there is the usual stamp duty to pay at 0.5 per cent when you buy any shares.

If you want to include unit trusts in your PEP, check whether the PEP manager will allow this.

Sharewise, a subsidiary of Skipton Building Society, operates a return- commission policy on unit trusts. For example, if you invest pounds 6,000 in M&G's 2nd General unit trust, there will be an initial fee of which 3 per cent, pounds 180, will be paid by M&G to Sharewise as commission for introducing the business.

"Instead of keeping this commission, Sharewise charges its standard dealing charge, and then passes back the commission to the customer. Its dealing charge on a pounds 6,000 investment is pounds 32 plus stamp duty, but the customer then receives a cheque from Sharewise for pounds 180, the rebated commission," a spokesman explains.

q Contacts: Bradford & Bingley, 01274 555700; Lloyds Bank, 0345 455565; Sharewise, 0113 2444095; Killik & Co, 0171-384 4400; Charles Stanley, 0171-739 8200; NatWest, 0171-895 5600; ShareLink, 0121 233 9955.

For a full list of PEP managers offering self-select PEPs and details of their charges, see Chase de Vere's latest PEP Guide which costs pounds 12.95 and is available on 0800 526092. For details of stockbrokers in your area contact the Association of Private Client Investment Managers and Stockbrokers on 0171-247 7080.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
news
News
Those who were encouraged to walk in a happy manner remembered less negative words
science
Sport
footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League - but Mourinho is short of strikers
Arts and Entertainment
Princess Olga in 'You Can't Get the Staff'
tvReview: The anachronistic aristocrats, it seemed, were just happy to have some attention
News
Renee Zellweger as Bridget Jones
i100
Life and Style
tech

Board creates magnetic field to achieve lift

News
There have been various incidents of social media users inadvertently flouting the law
news

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
Sport
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Environment
Sudan, the last male northern white rhino
environmentThe death of a white northern rhino in Kenya has left the species with a single male. These are the other species on the brink
Finacial products from our partners
Property search
Going down the wrong road: parking fines are
nudging people into debt difficulties

Charges related to car parking rising and leading to serious money woes

Going down the wrong road: parking fines are nudging people into debt difficulties

Stacks of income: Drax is among the companies in Neil Woodford’s portfolio that he believes will pay strong dividends

Mark Dampier: Woodford’s young companies could be the stars of the future

Stacks of income: Drax is among the companies in Neil Woodford’s portfolio that he believes will pay strong dividends

A trader works on the floor of the New York Stock Exchange

Simon Read: The markets might not be calm but you should be

Don't panic, it’s a wise idea to check investments regularly to ensure they are on target for your hoped-for returns

Only six per cent of the 13,000 new homes bought during Help to Buy’s first nine months were in London

Money Insider: Help to Buy must be boosted by building

With little or no wage growth being seen in the UK, increasing house-price inflation could see the number of first-time buyers slide further, unless there’s a new accelerated house building programme

House buyers can take their pick of more than 3,500 home loans, the most available since the financial crisis

Simon Read: Those cheap home loans may be built on shaky foundations

You should ignore the headline offers and trickery and work out the total cost of borrowing under different deals

Denise Leigh, who appeared in a production
of Rigoletto with Alan Opie, was left without an essential service

The opera singer, the broadband delay and why customers aren’t divas if they expect a good service

Denise Leigh, who appeared in a production of Rigoletto with Alan Opie, was left without an essential service

Problem debt adds £8bn cost to the economy

A charity has calculated the cost to us all of unmanageable debt – from lost productivity to the extra demands on the NHS

Payday loan stores are to face tougher regulations after moves proposed by the Financial Conduct Authority (FCA) call on more responsible lending

Calls for payday lenders to sign up to an officially recognised price comparison site

The regulators are at last tackling the high-profile payday lenders, but they appear to be ignoring the growing problem of internet loan firms

According to the research, only one in five customers trusts their energy company

Rap for energy firms won’t stop the rising prices

As the cold weather hits, the question of soaring bills will be felt by each of us at home

Nikki Galloway has enthusiastically embraced buying and selling over the internet

Selling goods online: The pros and cons

Nikki Galloway (above) sells jewellery via her own website as well as on Facebook, Amazon and Bouf

The city of Queenstown on the shores of Lake Wakatipu with the Remarkables mountain range in the background.

You can have it all: Asian stocks get on the dividend bandwagon

Queenstown on Lake Wakatipu in New Zealand. The country’s stock market was boosted last month on John Key’s re-election

Staff at work in the packet and parcel section of the Royal Mail's Swan Valley mail centre

Bargain hunter: Halfords’ zero-VAT child car seats are cheap and with a safety message

Royal Mail is cutting its small parcel charges from 20 October

Elderly people living in certain countries abroad are being denied pension rises

Anyone who moved to countries including Australia, Canada, South Africa and a 100 other places, have had their pensions frozen at the rate it was paid at when they left the country

Governor money plans to save clients time and cash with its online service

Simon Read: Relegate struggling funds from your plans

Every fund has good years and bad, but consistent underperformance over a number of years points to something more fundamental

Investments: Spot the difference and pick a fund that’s ready to go it alone

Nick Train thinks luxury fashion brand Burberry is one of the companies that has prospered in digital marketing

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Helpdesk Analyst

    £23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

    Senior Helpdesk Analyst / Service Desk Co-ordinator

    £27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

    Senior Pensions Administrator

    £23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

    Corporate Actions Administrator / Operations Administrator

    £25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

    Day In a Page

    Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

    A new American serial killer?

    Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
    Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

    Sting to trap paedophiles may not carry weight in UK courts

    Computer image of ‘Sweetie’ represented entrapment, experts say
    Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

    Return to Fukushima – a land they will never call home again

    Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
    Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

    Wildlife Photographer of the Year

    Intimate image of resting lions claims top prize
    Online petitions: Sign here to change the world

    Want to change the world? Just sign here

    The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
    Ed Sheeran hits back after being labelled too boring to headline festivals

    'You need me, I don’t need you'

    Ed Sheeran hits back after being labelled too boring to headline festivals
    How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

    How to Get Away with Murder

    Shonda Rhimes reinvents the legal drama
    A cup of tea is every worker's right

    Hard to swallow

    Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
    Which animals are nearly extinct?

    Which animals are nearly extinct?

    Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
    12 best children's shoes

    Perfect for leaf-kicking: 12 best children's shoes

    Find footwear perfect to keep kids' feet protected this autumn
    Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

    Arsenal’s ray of light ready to shine again

    Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
    Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

    Moyes’ show of sensitivity thrown back in his face... by Ferguson

    Manchester United legend tramples on successor who resisted criticising his inheritance
    Two super-sized ships have cruised into British waters, but how big can these behemoths get?

    Super-sized ships: How big can they get?

    Two of the largest vessels in the world cruised into UK waters last week
    British doctors on brink of 'cure' for paralysis with spinal cord treatment

    British doctors on brink of cure for paralysis

    Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells