Fidelity launches PEP

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The Independent Online
FIDELITY has launched a unit trust personal equity plan aimed at investors who are 10 to 15 years from retirement, writes Caroline Merrell.

The Fidelity UK Dividend Growth Fund will invest in companies that are anticipated to pay an increasing yield.

All the income in the PEP will be reinvested until the investor retires. Clients can then take tax-free income to supplement their pensions. The initial yield on the unit trust will be about 2 per cent, compared to the yield on the UK index of about 3 per cent.

Fidelity is also launching a PEP for first-time investors. This will buy a range of the company's unit trusts.

Figures from the market research agency NOP and the Association of Unit Trusts and Investment Funds show that unit trusts and PEPs are held by just 4 per cent of the population, despite the big gains in the UK stock market last year.

Charges on the Fidelity PEP are 2 per cent at the outset and there is a sliding scale of withdrawal charges, reducing from 3 per cent in the first year to 1 per cent in the third.

Murray Johnstone is cutting the initial charge on PEPs for people investing in five of its funds. The offer runs until 5 April, and there are no exit charges.