Foreign & Colonial has introduced Blue, an open-ended investment company, as a tax-efficient alternative to with-profit funds and distribution bonds.
The fund invests in stocks and shares, deposits and investment grade corporate bonds around the world. It aims to provide annual returns of between five per cent and 5.5 per cent. Investors can make capital withdrawals, which are tax-free if they are offset against their capital gains allowance.
The fund could be suitable for clients who do not want to take high risks with their money and who are looking for a tax-efficient investment. However, inheritance tax could be more of a concern for higher net clients than capital gains and clients with moderate sums to invest could take out a corporate bond Isa to get higher returns. The tax advantages of blue could also be difficult for investors to grasp.
All nine of Foreign & Colonial's Oeics have Standard & Poor's star rankings. High income has a S&P four-star ranking and five funds Anglo nippon exempt, European exempt, Japanese smaller companies, North American exempt and South East Asia exempt have S&P two-star rankings. Three funds European smaller companies, F&C UK smaller companies and F&C US smaller companies have S&P one-star rankings.