5 IN 1 INVESTMENT TRUST ISA
Type: Mini or maxi investment trust Isa
Aim: Growth by investing in Fidelity Asian values, Japanese values, European values, special values and Edinburgh investment trusts
Minimum investment: Lump sum £1,000, monthly £100
Maximum investment: £7,000
Charges: Initial 3.25%, annual 0.84%
Commission: Initial 3%
Tel: 0800 414181
Adrian Wilkins, senior associate, Thomson's Wealth Management, Godfrey Bloom, research director, TBO Corporate Benefit Consultants, Steve Barton, proprietor, Steve Barton Financial Services
Suitability to market 6.7
Investment strategy 8.0
Past performance 8.0
Company's reputation 8.3
Product literature 5.3
Fidelity's 5 in 1 Isa is designed to produce growth by allowing investment into all of its five investment trusts.
First, the panel comment on how the Isa fits into the market. Barton says: "This will have a niche sector. There are few plans offering so diverse a fund selection. It will appeal to applicants who want diversification." Bloom says: " There is as always, a plethora of Isas in the market. The market profile of Fidelity should give it pole position in its sector." Wilkins says: "This is aimed at the higher-risk end of the Isa market, offering choice for clients who favour investment trusts."
Highlighting the type of client for whom this Isa would be suitable Wilkins says: "One who believes the market is likely to bounce back and who is prepared to take a higher risk than most." Bloom says simply: "Bold clients." Barton says: "This will appeal to the more adventurous client. Oeics and unit trusts tend to be the starting point for new investors. Investment trusts, being more volatile, yet often more rewarding, tend to appeal to the more experienced player with a larger portfolio."
The panel move on to the marketing opportunities the product will provide. Bloom thinks nothing particularly out of the ordinary. Barton says: "Very limited. Market uncertainty at present probably means it will be an ideal time to invest, but client confidence to invest is not presently opportune."
Turning to the useful features and strong points of the product Bloom says: "Fidelity is on a roll at the moment as an investment house. It is getting plenty of things right and it is an opportunity to capitalise." Barton suggests the brand name and the diverse fund choice. Wilkins says: "Access to all Fidelity's investment trusts as well as the Edinburgh trust with all the advantages that go with investment trusts, such as gearing."
Giving their views on the investment strategy and investment options the panel are divided. Barton thinks the five trusts have varying histories and that gearing in a rising market will give great flexibility. Wilkins says: "Probably best to use the UK-based funds, as both Far East funds have under performed. And, as Anthony Bolton has now stepped down from the European trusts, there are doubts about future performance." Bloom says: "Good strategy, although equity timing is difficult at the moment. Markets will not recover until economic growth recovers and who knows when that may be?"
Assessing the Isa's drawbacks Bloom says: "Because Fidelity is doing so well at the moment, its trusts are not trading at a discount. In point of fact, Tony Bolton's special values fund is trading at a premium so the investor is actually paying more than the full value of the underlying investments. A prospective investor would do better to access Bolton's expertise via the unit trust option. Also, the risk profile is higher than it otherwise should be." Barton points to the fact there are no American or emerging markets funds. Wilkins says: "Charges aren't great, there is limited choice of good funds, higher-risk Isa gearing and currency fluctuations on international funds."
The panel then give their opinions on Fidelity's reputation. Bloom thinks it is good. Wilkins agrees and adds: "A very good reputation. One of the first companies that springs to mind when recommending unit trusts and investment trusts." Barton says the strength of the brand name and the innovative funds network mean Fidelity has an excellent reputation.
Moving on to Fidelity's past performance record, Bloom again says it is good. Wilkins says: "Some top performing funds mixed in with some which haven't performed so well. Therefore, fund selection needs to be made carefully." However, Barton says: "There are some excellent funds, both consistent and top quartile."
When asked what Isas they see providing the main competition, Wilkins comes up with the products from Sterling, Selestia, Skandia and Legal & General. Barton says: "For such a diverse investment trust option there is little competition. For less choice, Fleming and Gartmore offer limited competition."
Analysing whether the charges are fair and reasonable the panel agree they are. Barton thinks the hidden charge of premium and discount is always a matter of concern with investment trusts. Wilkins says: "Regular savers could find lower charges at an online fund supermarket."
Next the panel consider whether the commission is fair and reasonable. Bloom thinks it is. Wilkins thinks it depends on how much the adviser is willing to take. Barton says: "It is industry standard and can be discounted."
The panel turn to the product literature. Barton says: "It follows Fidelity's tried and tested pattern and colours. The main brochure is very good with easily an understood explanation of how investment trusts work. Wilkins says: "Not too bad. It covers most of the relevant points, although it could have enclosed the Edinburgh investment trust addendum within the brochure. Bloom thinks the literature is very ordinary.
To sum up Wilkins says: "Interesting time for a new launch, unless it is aimed more at the transfer market rather than new money."