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
PROMOTED VIDEO
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Life and Style
food + drink
News
i100
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas