Type: Mini or maxi Isa investing in unit trusts and Oeics.
Aim: Growth and income by investing in unit trusts and Oeics.
Minimum investment: Lump sum £500, monthly £50.
Maximum investment: Lump sum £7,000, monthly £583.
Investment choice: Investors choice of UK blue chip, European blue chip, US blue chip, Asia Pacific, UK small companies, European strategy, European technology, US opportunities, Japanese opportunities, Pacific opportunities, Greater China, global opportunities, UK equity safeguard, FTSE 250 index, Japan index tracker, corporate bond, equity monthly income.
Charges: Initial 0-5 per cent, annual 0.5-1.5 per cent.
Special offer: Initial charge reduced from 5 per cent to 4 per cent for European strategy fund, US opportunities fund and European technology fund.
Offer period: Until May 31, 2001.
Commission: Initial up to 3 per cent, renewal up to 0.5 per cent.
Tel: 0800 0151646.
Suitability to market 6.0
Investment strategy 5.5
Past performance 4.5
Company's reputation 5.0
Product literature 7.0
Govett Investments has brought in the Isa selector, a mini or maxi individual savings account (Isa) that invests in a range of Govett unit trusts and open-ended investment companies.
The panel are not very enthusiastic about how the Isa fits into the market. Hughes regards it as being average, while Callaway says: “This Isa is one of many in what is now an overcrowded market, although it does not fit in well with just the one market.”
Elms says: “It fits in reasonably well. The fund choice and sector split provide good access, with the exception of a US tracker.”
Lewis says: “The Isa has a compact range of 17 funds available, which gives it a reasonably wide range, although it will have to compete with better known products that have a better or larger fund range.”
Looking at the kind of investor that the fund is suitable for, Elms says: “This is for the experienced investor who is looking for a product that offers access to smaller, more specialised fund managers.”
Hughes and Callaway think that the product is suitable for the average investor who is looking to invest in an equity-linked Isa, while Lewis says: “This product can be used to cover a wide range of investor, from those seeking income from corporate bonds, to medium to high risk clients looking for capital growth from the funds.”
Moving on to the marketing opportunities that the product provides, Hughes says: “This product offers no marketing opportunities that existing Isas do not already provide. However the fund options are well packaged.”
Callaway says: “This offers no marketing opportunities to us, as we would not market it,” while Lewis says: “The Isa can be used to offer clients a reasonably wide range of funds, particularly as it also has protected funds on offer, which are very useful in the current economic climate.”
Examining the main useful features and strong points of the Isa selector, Callaway says: “The Isa has a reasonable fund range and a reasonable fund switching cost of around one per cent. Another strong point is that protected and index tracking funds are available.”
Hughes cannot identify any strong points, while Lewis says: “The inclusion of protected funds is probably the most useful feature. Protected funds were the main thrust of Govett some years ago. There is also a useful range of income funds for those seeking income.”
Elms points to the Isa transfer facility and the fact that the fund managers are named in the product literature, providing valuable information.
On the other hand, looking at the disadvantages of the Isa, Lewis says: “The biggest drawback has to be the fact that Govett Investments is not as well-known as its larger competitors.”
Elms says: “The product has restricted risk-averse opportunities and offers just one low risk fund. Also it is not a well-known brand and has above-average charges leading to an above average reduction in yield.”
Hughes says: “There are no disadvantages in the normal sense, but the opportunity to be different has been missed with this fund.”
The panel is also lukewarm about the investment strategy of the Isa. Elms says: “The strategy is unimaginative and unexciting, with the exception of the inclusion of the greater China and global opportunities funds.”
Callaway says: “The product has a reasonable range of funds, although they do have rather uninspired performance.”
However Hughes is more positive. He says: “It has a sensible menu of options and strategies that are presented in a manner that the majority of clients will understand.”
Casting an eye over the reputation of Govett, Callaway says: “The company is not universally well known. I've never used it personally – who does? No IFA that I know has ever used it.”
Lewis says: “Govett is best known for the protected funds that it established some years ago, before its take-over by AIB.”
Elms comments: “I have no particular opinion about the company, although judging by the investment bulletins it is not a startling performer.” Hughes adds: “The company has not created a market leading name for either product innovation or design.”
The panel are not impressed by Govett's investment past performance either. Callaway says: “Its performance is uninspiring. Most of its funds are dull in performance terms. Although two are 'A' rated and one is 'AA' rated, these are not exactly the Rolls-Royces of fund performances.”
Lewis says: “Govett funds have rather a mixed reputation at the moment. Only the company's European funds offer above average performance, as well as the US blue chip and Asia Pacific funds sharing good top quartile performance. The protected range also does seem to have gone into a decline.”
Hughes says: “Govett's UK funds have been poor over all periods, while its global funds have been average and its European funds have been fair.”
Identifying the main competition to the Govett Isa, Elms points to fund supermarkets such as Fidelity Networks and Skandia. Callaway also identifies Fidelity as providing the main competition, while Hughes thinks that competition will come from other, better known, companies.
Lewis says: “Competition will come from most of the other fund managers. Fidelity, Jupiter, Schroder and Henderson all offer a wider range than Govett and are probably better known.”
Assessing if the charges are fair and reasonable, Callaway says: “Not really. They are reasonable in terms of the 'good old days', but we are dealing with the now. If stakeholder pension plans can be sold within the one per cent annual management charge, what future is there for Isas with an initial charge of five per cent and an annual management charge of 1.5 per cent?”
Elms thinks that the charges are on the high side, while Hughes says that the product has an above average initial charge and an average annual charge.
Turning to the product literature, Callaway says: “The literature is pleasant and is easy to read, if a little small. Also the use of the word 'stability' in it is a little underexplained. The use of the paint motif is ironic, as the brochure and performance is as exciting as watching paint dry.”
Elms says: “The literature is actually quite good – the colour coding of funds works and the graphics are simple and straightforward. However the colours should be extended across the fund performance statistics.”
Hughes says: “It is well presented and thought out. The application form is particularly well designed. Can other companies please take note of the amount of space allowed for completion?”
Lewis adds: “The use of colour coding is extremely well done and is highly presentable. Colourful presentations and easy to read literature are a great boon for the product.”
Finally Hughes sums up: “This is yet another product which I am sure IFAs will study and then never use. Name awareness is law nowadays and many clients prefer a name that is known to them. An IFA is an adviser, not an evangelist.”
Michael Hughes, Director, Eccleston Park Financial Planning, Roland Callaway, Director, Callaway & Sons, Jonathan Elms, Partner, Teare Rose, Keith Lewis, Proprietor, Hartley Greatbatch.