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I-funds opening up ETFs to IFA market

i-Funds, a franchise of Raymond James Investment Services, is awaiting FSA approval for a fund of exchange-traded funds aimed at IFAs.

The fund has been developed to make ETFs more attractive and accessible to IFAs. Only members of a stock exchange can currently trade ETFs.

It is also difficult for providers to pay IFA commission on EFTS as they are not actively managed and have low charges.

The fund of ETFs approach, made possible by Ucits III legislation, solves both problems.

The fund manager is responsible for trading the funds, allowing i-Funds to justify an initial and annual charge from which it can pay commission. The proposed initial charge is 4.5 per cent with an annual charge of 1.5 per cent. Commission will be 3 per cent initial and 0.5 per cent renewal.

The objective of the fund, which will have a minimum investment of £1,000, will be to outperform Libor by 2 per cent.

The fund manager, former Margetts investment director Nigel Baynes, will use a software package to analyse each stock within every ETF he holds. This process allows each ETF to be assessed in terms of risk and reward.

Sales and marketing director Stacey Ash says: “Nigel Baynes developed the investment process over many years, it hasn’t just fallen out of the sky. The early response from the IFA community has been favourable but there is a lot of educational work we will have to do, as ETFs are not as widely known in the UK as in the US.”

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