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Framlington set for fund merger

Framlington is to merge its 18m New Leaders and 30m managed portfolio funds into its 49m managed growth fund under chief investment officer Jeremy Lodwick.

The New Leaders fund was launched five years ago to invest in the new world economy by investing in seven business sectors – healthcare, leisure, financial services, internet, technology, media and telecoms.

Framlington says the fund’s mandate is too narrow to succeed in the current environment and a less specialised fund will provide better returns over the medium term. Fund manager William Calvert will continue to manage the firm’s emerging markets fund.

The Framlington managed portfolio is a fettered fund of funds investing in Framlington unit trusts. Fund manager Richard Peirson will continue to manage the financial, managed balanced and gilt funds.

Both mergers are due to take place on September 30.

Hargreaves Lansdown investment manager Ben Yearsley says: “It seems Framlington is finally admitting that investing in big names for the sake of it does not always work.”

German bank West LB which trades under the name Structured Solutions Group in the UK structured market, has started to increase its market share with good value products such as the latest offering, the early bonus plan three.

While rival products are having to incorporate two indices or put the original capital at risk to offer att-ractive returns, early bonus plan three is only linked to the FTSE 100 and offers full capital protection if held for the full six-year term.

It is structured as a six-year capital-protected inv-estment but if the FTSE 100 has grown by 7 per cent or more on the second anniv-ersary, the product matures and the client gets back their original capital plus 14 per cent growth. The plan is tax-efficient as those who hold the shares directly can offset any growth against their annual CGT allowance (currently 8,500 for this tax year). This is a very underused allowance so most investors will not have to pay tax on the proceeds.

If the FTSE has not grown by 7 per cent on the second anniversary, the plan continues for another 12 months. If on the third anniversary, the FTSE 100 has grown by 10.5 per cent or more, the plan will mature with a 21 per cent coupon and so on until the sixth anniversary. Despite the fact that previous cont-racts of this type did not require any growth for the return to be triggered, this is still a good value product within its peer group and worth a closer look.

Matthew Woodbridge is bond manager at Chelsea Financial Services

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