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Disdain for curb on suite equities

IFAs and product providers have poured scorn on the Treasury&#39s recommendation that the equity products in its suite of stakeholder products should have a maximum equity exposure of 60 per cent.

In its consultation paper on the Sandler stakeholder products, the Treasury is proposing the unit trust and the underlying assets of the with-profits and pension products should mirror the strict constraints of a cautious managed fund.

This means they cannot allocate more than 60 per cent of assets in equities, with the rest invested in fixed interest.

Product providers and IFAs have slammed the recommendations, accusing the Government of trying to substitute advice with low-risk products which they say could easily be misbought by confused investors.

They also point to the fact that the Investment Management Association&#39s cautious managed sector – from which the stakeholder specifications were taken – has been soundly outperformed by the money market sector over several years.

According to Standard & Poor&#39s, the average cautious managed fund was up by 1.38 per cent in the five years to the end of January while the average money market fund rose by 21.72 per cent.

Baronworth Investment Services director Colin Jackson says: “This is the nanny state. If the Treasury is setting this up, people might as well stick their money in a building society account.”

Michael Philips proprietor Michael Both says: “Will people in the street know what is in their fund? Giving these products a veneer of safety is doubly dangerous.”

New Star marketing director Rob Page says: “To have a 60 per cent maximum equity level as a substitute for advice is fundamentally flawed. It has no sensible place.”

A Treasury spokesman says: “People should let us know their views. It is what a consultation is all about.”

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