Abstracts » Business

Eating up performance

Article Abstract:

Personal equity plans (PEPs) are available with an initial charge or an annual management charge. The majority of investors used open ended investment companies (Oeics) as their underlying Pep investment, with fewer using investment trusts. A low or nil initial charge is attractive but the annual management charge is more significant in the longer term. Index tracking Peps are cheaper with some only charging 0.5% a year, but many top selling Pep managers have reduced initial charges. With corporate bond Peps it is important to consider the annual charge.

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A sting in the tail

Article Abstract:

A report by Fitzrovia International, an independent research group, shows that investment houses charge around 15% more than the quoted annual fee. The Homeowners Investment Growth fund is one of the most expensive equity funds, with a total expense ratio of 3.67%. The Invesco International Bond has an annual cost of 2.33%. Investors need to know the real costs of investment, as costs have a direct effect on the performance of the fund.

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