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77% of investors say restore Isa tax concession

HSBC is revamping its asset management business, with plans to close poorly performing funds and expand better-performing investments.

The firm is separating its active and passive managed funds,
enlarging its freestylerange and closing US and Japan funds.

It follows a wide-ranging assessment of client demands and renewed
focus on performing areas of the investment business.

HSBC’s investment business Asset Management Services has increased
assets under management by 47 per cent to £99m since the end of
2001. The new global business will be called HSBC Investments and led
by chief executive Alain Dromer.

The multi-manager range will be a core product of HSBC Investments.

A new specialist business called HSBC Alpha Business is being created
for professional investors.

A clear distinction is being made in the range between passive funds
that deliver market returns and alpha funds that give value added
performance. HSBC considers its passive fund management as a core
strength of its business since it benefits from scale.

Part of the plan will be to expand the freestyle fund range, adding a
European and a UK fund to the existing Asian fund which is high-alpha
and non-constrained.

Dromer says: “Taking up the challenge of HSBC’s managing for growth
strategy, we have developed some exciting strategic initiatives in
response to important trends affecting the investment industry,
creating challenges for both distributors and manufacturers of
investment products.

“I am very confident about our ability to grow much further by
unlocking the potential for strong sustainable growth in HSBC’s
investment business.”

Over three-quarters of investors support the restoration of Isa’s
original tax concessions and an increase in the current Isa limits,
according to research by Interactive Investor.

The survey says 77 per cent of investors favour a £10,000 Isa
investment allowance, which is a significant increase on the current
£7,000 and the forthcoming £5,000.

Seventy-seven per cent also want tax relief on dividends to be
restored to the tax wrapper to broaden their appeal.

Chief executive Tomas Carruthers says the savings gap continues to
widen beyond the £27bn first quoted by the ABI in 2001 and the
nation’s household savings ratio has slipped from 9.4 per cent when
Labour came into power to 5.5 per cent at the end of 2003. In 1980,
the household savings ratio was 12.4 per cent.

Carruthers says: “Since 1997, the Government has talked extensively
about the need for more of us to save for the future yet at the same
time they have gutted pensions through the removal of tax relief on
dividends and done the same to Isas.

“Current plans will also see Labour slash the amount that can be
saved in an Isa by nearly 30 per cent. Although depressing, it should
be no surprise that the savings ratio in this country has nearly
halved under this Government.”

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