Plus points: Investment managers who offer this type of product commonly insist that at least 50 per cent of the money invested must be managed by them. Framlington, very reasonably, is only asking for 25 per cent. This means that three-quarters of the money invested can be put with other managers, lessening the investor's exposure to the risk that Framlington's managers might underperform.
Investors willing to take a small risk are well-suited to the international trusts run by other managers such as Schroder, Foreign & Colonial, Fleming and Edinburgh. According to Jayne Caudle, an adviser at the London-based Clark Conway partnership, "these are not middle of the road funds". The risk could carry a higher reward - and the names are trusted.
Drawbacks and risks: Withdraw your investment from an investment trust built into this PEP and it will cost you 1 per cent of your investment - no matter when you withdraw. This could amount to more than the normal initial charge, which has been wiped from this product. In contrast to most unit trusts, this could eliminate the benefit of the reasonable annual management fee of just 1 per cent. However, other charges are also low.
Verdict: Very suitable for the risk-lover.
Marks out of five: Four.Reuse content