The Best and Worst: Europe slow in boosting PEP: PEP-qualifying unit trusts

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The Independent Online
UNIT TRUSTS that have at least half of their money invested in European Community markets now qualify for inclusion in tax-efficient personal equity plans. But European markets have disappointed investors recently as recession and rising interest rates on the Continent have taken their toll.

AXA Equity & Law believes its European unit trust had too many smaller companies in the portfolio when the markets there were hit by plunging share prices at the beginning of the Gulf war. Smaller companies were hit hardest.

Peter Davies, associate director at AXA Equity & Law Investment Managers, said the fund also invested in Norwegian companies, believing they would benefit from higher oil prices as a result of the war. This did not happen.

The fund has a new manager, although Mr Davies said this was just a coincidence.

Arkwright Recovery came under the control of Arkwright Management just over two years ago, and Peter Botham, a director of the company, says the portfolio was 'turned upside down and inside out'.

Recent performance looks much healthier. In the year to the beginning of this month, it ranks at 27 out of 144 UK Equity Growth funds, showing a profit of more than 11 per cent.

St James's Place Unit Trust Group, a subsidiary of J Rothschild Assurance, does not sell PEPs directly to the public but its PEP Progressive trust is available for inclusion in self- select PEPs.

The PEP Progressive fund is managed by Nils Taube, who says it is invested mostly in large companies. Among its key holdings at present are Shell and Marks & Spencer.

----------------------------------------------------------------- TABLE: BEST AND WORST: PEP-QUALIFYING UNIT TRUSTS ----------------------------------------------------------------- The best Pounds 1 St James's Place PEP Progressive 1960.77 2 Perpetual High Income 1853.97 3 Schroder Enterprise 1803.47 4 Newton General 1789.73 5 Perpetual PEP Growth & Income 1779.21 The worst 346 Fidelity European 894.80 347 Abtrust European 880.37 348 Save & Prosper European Smaller Co's 854.94 349 Arkwright Recovery 842.26 350 AXA Equity & Law Europe 825.39 The chart shows the value of pounds 1,000 invested over three years to 1 April, offer to offer, income reinvested ----------------------------------------------------------------- Source: Chase de Vere Investments/Micropal -----------------------------------------------------------------