Guarantees are all the rage

Article Abstract:

UK unit trusts increasingly offer guarantees. This is an indication that market departments of unit trust providers have taken heed of past disasters where trusts have been launched when markets peaked. Return of capital may be guaranteed, or there may be protection covering drops in the market. Derivatives can provide some protection. Corporate bond personal equity plans (Peps) can offer income that is higher than deposit accounts but investors should assess the impact of charges and rises of interest rates which affect the prices of these products.

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Performance

Article Abstract:

UK investors have a range of sources to assess the performance of unit trusts, and they are protected by the Financial Services Act which regulates how information is presented. Investors should compare performance of the unit trust they are considering with others of the same type, and examine a number of time periods. They should also assess whether the nature of the trust's investments have changed and seek to spread risks by using more than one fund manager.

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