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&#39Outdated Peps need more reviews&#39

The vast majority of Pep inv-estors have distorted and outdated portfolios because their accounts are not being reviewed as often as they should be, according to Bates Investment.

The IFA says the average unit trust or Oeic Pep account holder has a portfolio with an 83 per cent weighting in UK equities despite the fact that the UK stockmarket only makes up around one-tenth of the total value of global markets.

Using Investment Management Association data, Bates says the average portfolio has 6 per cent in fixed interest, with just 0.01 per cent invested in the US, which accounts for around 55 per cent of the combined value of the world&#39s markets. It says such weightings do not reflect the needs of investors, who want more exposure to fixed interest as they grow older.

Bates says rebalancing to bonds will also provide greater tax advantages after April 2004 when equity holdings in Isas and Peps lose their ability to reclaim the current 10 per cent tax paid on dividends. Fixed-interest funds, however, are still expected to be able to reclaim the 20 per cent tax on the income they produce.

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Wednesday, 23 October 2002 Aim: Income or growth by investing in exchanged traded funds, unit trusts and Oeics Minimum investment: Lump sum £25,000 Investment split: Choice of managed growth, overseas growth, worldwide growth, rising income and high yield portfolios Income facility: Yes Charges: Initial 4%, annual 1% Commission: Initial 3%, renewal 0.5% Tel: 0800 0353200

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