OTHER ROUTES TO A UNIT TRUST PORTFOLIO

There are alternatives to funds of funds that offer similar benefits. Skandia, for instance, offers a multi-ISA which gives investors a choice of 97 unit trusts and Oeics from various fund managers under a single umbrella. But this service costs 4.5 per cent up front and 0.75 per cent annually, on top of an initial charge and the annual fee for each fund.

A Skandia spokesman points out that if you were moving funds between ISA managers on the open market you'd pay more than a 0.25 per cent initial charge. But Amanda Davidson, at Holden Meehan, does not see the benefit: "You can achieve what you want through a collection of PEPs and ISAs with different providers over several years - it's easy to transfer if you get fed up."

If you have more to invest - at least pounds 50,000 - a portfolio of unit trusts can be managed by investment houses such as Churchill. This approach is generally fee-based - you'll pay around 1 per cent a year, and will probably also benefit from reductions in front-end charges. "But the drawback is that each time you sell a holding, you'll be up for capital gains tax," says Churchill manager Malcolm Weightman. "That's the big advantage with funds of funds."

n Skandia MultiISA: 01703 334411; Churchill Investments: 01934 844 444.

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