Simpler investment trusts

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The Independent Online
Investors could eventually find unit trusts much easier to understand and buy as a result of a consultation paper expected from the Securities and Investments Board next week.

SIB is expected to ask for views on a revolution in the way unit trusts are sold. At present trusts quote two prices - one is the amount the fund manager will pay for units, when cashed in by an investor and the other is the amount it sells them for.

These are known as the bid and offer prices. The difference between the two will typically be 5 or 6 per cent, including the initial charges payable by the investor. However, the 'spread' between bid and offer can be wider than the charges themselves, reflecting extra charges such as dealing costs and stamp duty.

Investors would find units a friendlier investment if there were just one price. The Association of Unit Trusts and Investment Funds (Autif) argues that a single pricing system would not necessarily be fairer than the present system. Autif says a mechanism would have to be found for expressing costs under a single-pricing regime.

Several fund management groups already offer funds with single prices to UK investors from offshore investment centres.

The latest comes from Fidelity Investments. The Emerging Markets fund will be launched on Monday from Luxembourg and will be priced at dollars 10 a unit. There is a sales charge of 5.25 per cent, which is deducted at the outset. The annual management charge is 1.5 per cent.

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