Investments

Many people want to invest but wonder how to select the right individual investment.

Collective investment funds, (Unit Trusts, Investment Trusts and Investment Funds) allow us to invest with a small amount of money and little or no expertise, using a professional fund manager with research capacity and investment knowledge.

In 1868 the first Investment Trust’s objective still applies to collective investments. It’s stated aim:

“to provide the investor of moderate means the same advantages as the large capitalists in diminishing the risk of foreign and colonial stocks by spreading the investment over a number of stocks.”

Typically a collective fund will have about 80 – 100 different shares or stocks within it, which helps to reduce risk and, through diversity give a better balance of return. Funds are made up of units or shares that have a unit value related to the underlying value of the investments within the fund.

We believe it is virtually impossible to deliver a tax-efficient, suitably diversified portfolio at a low cost through direct equity investment. For most clients funds are a better way to match the risk and reward ratio to a stated investment objective. Where shareholdings are held as part of the financial planning, we recommend a Discretionary Fund Manager be appointed to manage and review the portfolio.

That is not say that none of our clients hold individual shares under their own management. For some, having a share portfolio is a matter of personal interest, for others it is a situation to manage as to change it overnight would trigger Capital Gains Tax.

The main types of collective investments are Unit Trust; Investment Trust; UK Investment Bond and Offshore Investment Bond.

Whatever method used to access investments, to get a suitable asset allocation, the specific investment vehicle must be considered and each will have its own tax profile and relative merits.

Individual Savings Accounts (ISAs), may reduce tax liability on investment returns. Specific Tax efficient investments such Venture Capital Trusts (VCTs) & Enterprise Investment Schemes also add value to portfolios, but require individual advice as to suitability and relevance, please contact us.