The joy of sectors

Article Abstract:

UK investment trusts and unit trusts are classified according to sector. The greatest diversity is found in general international funds which give protection against a single country performing badly. There are also funds specialising in geographical regions such as North America or the Far East. Some funds are geared to capital growth and others are geared to income. Growth funds may contain some high risk companies. Smaller Companies funds tend to be volatile but can perform well over the long term, and Venture and Development Capital funds also involve risk.

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Redeeming features

Article Abstract:

Personal equity plans (Peps) have tended to drive demand for unit trusts in the United Kingdom, and this has meant a focus on investments in mainland Europe and the UK. The market excluding Peps has tended to be static, and intermediaries account for 90% of demand, in contrast to Peps, where retail investors carry more weight. Funds have been moved into UK and mainland European bonds and away from Asia in 1998. The structure of open-ended investment companies means that switching within the fund group is possible, so money may remain longer with a fund group.

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Umbrella stand

Article Abstract:

United Kingdom unit trusts are increasingly being turned into open-ended investment companies (Oeics) which are similar to mutual funds in the US. Unit trusts have not been popular in mainland Europe for tax and regulatory reasons, while there is greater flexibility with Oeics. Investors may fear contagion with Oeics, where one fund under an umbrella is affected by the performance of other funds. There are no tax changes for UK investors when a unit trust becomes an Oeic.

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