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HL warns of investor confusion over new Libor funds

Hargreaves Lansdown says the imminent launch of a raft of funds with Libor-based returns is likely to confuse investors already baffled by the large number of products in the market.

Credit Suisse Asset Management is offering an onshore version of its Luxemburg-domiciled target return fund which aims for a return of six-month GBP Libor plus 2.5 per cent.

HL believes other groups will follow suit but with products with very different aims and styles which will boost demand for advice from confused investors.

Investment manager Ben Yearsley says one of the major problems will be that the funds&#39 risk profiles will vary so drastically. CSAM&#39s target return product invests purely in fixed interest but other funds will be equity only, making them unsuitable for risk-averse cautious investors.

Another potential pitfall is that many funds will fall under Ucits 3 regulations, which prevents their availability through Isas. But Yearsley says the amount of explanation about how returns are both sought and calculated is likely to be the biggest challenge facing IFAs as increasing numbers of providers launch products.

He says: “Getting investors to understand the funds, which are all going to be very different, will be difficult and will require a lot of time. The funds are good in concept but there is an awful lot of explaining to do with them.”


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BBB chief Lockyer says he has saved the industry millions

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