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Child&#39s play for Alliance Trust Savings

Alliance Trust Savings has established the First Steps Plan, a savings product for children that provides access to the Alliance Trust and Second Alliance Trust investment trusts alongside a range of other permitted investments.

The product is designed as a low-cost wrapper within which to build a portfolio of investments for a child through regular savings or a lump sum. The portfolio can be tailored for the individual&#39s risk and reward profile using a mixture of unit trusts, Oeics, investment trusts, exchange-traded funds, UK-listed securities, debentures and loan stocks, and gilts and cash. However, investments cannot be made in any investment the investor chooses &#45 they must be selected from a list of funds and shares provided by the company.

Alliance Trust Savings is owned by the Alliance Trust and Second Alliance Trust investment trusts, which were established in 1888. Consequently, the plan can be used to gain access to the trusts with the purchase charges rebated if it is linked to an adult customer&#39s Alliance Trust Savings plan. However, investors are under no obligation to invest in these trusts.

The plan operates on a transaction-based charging structure with no set-up or annual plan charges. This means investors will pay a charge for the sale and purchase of shares and any cash transfers. For example weekly purchase of Alliance Trust shares, for which there is a minimum investment of £50, will cost £2.50. Weekly purchase of other investments, for which there is a minimum investment of £150, cost £7.50 plus 0.2 per cent dealing commission and stamp duty. Daily purchase of all securities costs £15 with a 0.2 per cent dealing commission.

This product is a kind of wrap account for children and this makes it more flexible than many other savings plans that are linked to a limited range of funds or investment trusts. The lack of set-up fees and annual management fees is good but as the costs are transaction-based it will be difficult to estimate the costs at the outset and it may prove costly to build up a wide portfolio that makes the most of the investment choice. Also, the plan has no tax advantages which may put some investors off.

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