A PEP in the Budget spirit
The promoters claim the new PEP is the first in the spirit of Ken Clarke's last Budget initiative aimed at helping UK industry raise cheaper finance.
The new PEP will invest in specially issued bonds from brick and roof tile company Redland and will offer a fixed tax-free income of 7 per cent a year for five years or a fixed total investment return of 40 per cent. Marks & Spencer is also believed to be looking at offering investors specially issued bonds through a PEP.
The PEP is sold through financial advisers and stockbrokers and pays the same rate as similar PEPs already offered by Legal & General and financial adviser Johnson Fry. These have been criticised because the bonds are from financial services companies rather than "proper" industry.
Bond PEPs, which offer investors a higher income but less potential for growth than PEPs, whose underlying holdings are shares, have yet to attract many investors despite their lower risks.
Most bond PEPs, instead of investing in one company, invest in a range of bonds through a unit trust and offer incomes of closer to 8 per cent, or even higher. This diversification reduces the risk of your investment going up in smoke if one company goes bust. But this is at the expense of the paid-out income varying, and of not knowing in advance when you will be able to get your original investment back without loss. Many of these bond unit-trust PEPs carry high charges.
All charges are built into the latest Redland bond launch, which is branded the Eurolife Guaranteed Bond PEP (after the company promoting it). The PEP is open for investment until 20 November and has a total investment limit of pounds 30m.
Redland is one of the biggest companies in the UK. But higher-yielding bonds might come from smaller companies in future.
Stockbroker ShareLink is offering a free booklet How to Select and Use Corporate Bonds for a PEP. Call 0121-233 9955.
- 1 What, let gays get married? We must be bonkers
- 2 Rocky Horror star Tim Curry 'suffers major stroke'
- 3 Exclusive: How MI5 blackmails British Muslims
- 4 Lord of the Sings: Sir Christopher Lee, 91, to release heavy metal album
- 5 Exclusive: Woolwich killings suspect Michael Adebolajo was inspired by cleric banned from UK after urging followers to behead enemies of Islam
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Nook is donating eReaders to volunteers at high-need schools and participating in exclusive events throughout the campaign.
Get the latest on The Evening Standard's campaign to get London's children reading.
Win anything from gadgets to five-star holidays on our competitions and offers page.
Day In a Page
A modern home of almost 1,000sq ft is close to Stoke Newington's high street. £499,950
A five-bedroom bungalow in Hoveton with riverside garden and mooring dock, £550,000
A refurbished one-bedroom flat with south-facing reception and high ceilings. £579,950
A four-bedroom Grade II-listed house in Nazeing with large gardens. £550,000
A modern four-bedroom house in a converted stable within walking distance to Peckham Rye. £695,000
Three-bedroom house in a quiet residential area within close distance to Battersea Park. £450,000
A three-bedroom cottage within commuting distance of London, Norwich and Cambridge. £250,000
A two-bedroom cottage with a sun room and gardens in South Chard. £350,000.
A three-bedroom semi-detached house with original features including fireplaces and wooden flooring. £399,950
A modern two-bedroom flat split across two floors and close to several public transport links. £595,000
A one-bedroom flat with an open-plan reception/kitchen and private balcony. £315,000.
A bright two-bedroom garden flat between South Acton and Chiswick Park. £499,950.
A listed four-bedroom farmhouse with stables, set in four acres. £500,000.
A three-storey family home with four bedrooms and an extended kitchen/diner. £995,000.
A three-bedroom Hamstone cottage in the rolling Somerset countryside. £430,000.
A luxury one-bedroom apartment on the first floor of a converted Victorian house. £425,000.