Personal Equity Plans: Bigger does not mean better

WHERE PEPS are concerned, does size matter? Should you place your faith in the big boys with inflated reputations, or hunt around for something small but perfectly formed that may give better performance?

Some funds have attracted billions and market their funds hard, but Jamie Ware, managing director of Churchill Investments, says they are not all coming up trumps.

"The big names are letting us down. Perpetual, Schroders, Credit Suisse and M&G have not been performing well. When a fund gets as large as Perpetual High Income, it is like a giant oil tanker; it cannot turn around quickly or shift funds into smaller companies' shares when necessary."

One big player which is still performing well is Jupiter. Individual managers' styles are crucial to the success of these "mega" funds, according to Mr Ware: "William Littlewood, manager of Jupiter Income, is an exceptional manager who has not let success go to his head."

Mr Ware runs a managed "fund of funds" PEP, called Navigator, made up of 10 different top-performing PEP funds. This reduces investors' exposure to a single fund manager. At the moment Mr Ware picks Newton's Higher Income and Income funds and Britannia Asset Management's Higher Yield fund as his favourites in the Churchill PEP.

Paul Penny, managing director of the discount house Financial Discounts Direct, agrees that Jupiter is leading the big players in terms of performance, but defends Perpetual.

"Performance has suffered but it still has some good funds and is pretty well organised," he says. "The two who are resting on their laurels are Fidelity and M&G. Fidelity still lives off its name and is big because it advertises extensively. M&G is trying to turn things round but has not got there yet."

Of the promising performers, Mr Penny says Invesco's European Growth Fund is "coming on in leaps and bounds". He also likes the Newton's European Fund, which is "going great guns". For UK funds he recommends Jupiter Income, Newton and the Premier Dividend Fund run by Premier Portfolio Managers.

Discount houses such as Financial Discounts Direct sell PEPs and have the bonus of returning to the investor most or even all of the initial commission (see page 17 for more on discount brokers).

John Hutton-Attenborough, of independent financial advisers Berry, Birch and Noble, says he has traditionally put investors' money into the larger funds, feeling they offer "protection and security". Smaller funds sometimes have impressive growth but can be more erratic, he says. Even so, he, too, is concerned about the performance of Schroders and M&G. He picks Jupiter just ahead of Perpetual.

"Jupiter has had a couple of hiccups but that has got to be expected with so much money pouring into the fund," he says.

His tips are the Jupiter European Growth Fund, particularly for people with a lot of exposure to UK funds, and the Save & Prosper Premier Equity Growth Fund. He also likes the CGU Monthly Income Plus corporate bond PEP for investors wanting secure income.

Liz Crawford, an IFA, is less enthusiastic about the big players. She argues that some of the better performers have actually taken more risks and invested heavily in equities. "With the economy not looking so rosy, these funds could get hit harder by falling markets."

She recommends corporate bond PEPs for the cautious, including the M&G Corporate Bond and the CGU Monthly Income Plus. She also suggests the Legal & General All-Share Index Tracking PEP (see p19 for more on tracker funds).

Contacts: Britannia, 0845 605 0555; CGU, 0845 607 2439; Churchill Investments, 01934 844444; Financial Discounts Direct, 0500 498477; Invesco Fund Managers, 0800 010333; Jupiter Asset Management, 0171-314 7600; Legal & General, 0500 116622; M&G, 01245 390390; Newton Fund Managers, 0800 614330; Perpetual, 01491 416123; Premier Portfolio Managers, 01483 306090; Save & Prosper, 0800 829100.

Start your day with The Independent, sign up for daily news emails
Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
News
science
Life and Style
Emoji are rapidly becoming the language of the internet
techWhy internet acronyms are being driven out by emoji
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before