Investors who are not satisfied with the prospect of low and falling interest rates on bank and building society accounts, but are concerned that share prices are closer to the top than the bottom of the current investment cycle might be attracted by the prospect of a unit trust which can be put into a Personal Equity Plan and combines the potential for stock market growth with a policy of locking in achieved gains and limiting the risk of loss.
The plan has been devised by Edinburgh Unit Trust Managers. It offers investors a protected price at which they can sell regardless of the actual performance of the units. Initially it is set at 22.5p for the 25p units, but is recalculated every time the selling price of the units rises by 10 per cent, and is then held for a further year.
If the price of units has fallen at the end of each protected period the price can be reduced, but only by 5 per cent, and it is then held for another 12 months.
Investors can put in a lump sum of pounds 1,000 or pounds 30 a month into the unit trusts, or pounds 1,500 or pounds 100 a month into the PEP version. There is an initial charge of 3.5 per cent, plus an annual management charge of 1.25 per cent and an exit charge of 1 per cent for investors who want out in the first 12 months, although this waived for investors who buy during the launch period, from 20 March to 30 April.
It seems a good idea for investors anxious to lock in any gains but investors will have to monitor their investment to decide whether to sell before the end of a protected period if the market has been falling and the next protected price is set to be reduced.
Allenbridge, the London-based investment adviser, has ranked and rated 17 Enterprise Investment Schemes and Venture Capital Trusts currently on offer to investors looking for tax shelters ahead of the end of the financial year. They awarded points for management expertise, approach to risk and investment strategy, and fees charged.
Pub Growth, investing in licensed premises, is rated best EIS scheme with a 65 per cent mark. Advent is rated the best VCT on offer with a score of 78 per cent and a "talent-packed investment team", just ahead of offerings from Augustus, Quester, Gartmore, Guinness Flight and Close Brothers. Hodgson Martin's VCT which will specialise in backing companies spun off from British universities, is rated only 60 per cent on the grounds that it is calling for a large fund which it might have difficulty investing.
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