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IFAs reassure split-cap investors in AITC guide

The Association of Investment Trust Companies has produced a consumer guide highlighting the views of key IFAs on how investors should be responding to the splitcap controversy and volatile stockmarkets.

The main aim of the guide is to encourage investors in split-caps not to over-react as not all split-cap trusts are in difficulties.

Professional Partnerships financial planner Gillian Cardy suggests investors should visit www.splitsonline.co.uk to review the performance of their trust. She says around 40 splits out of 113 are in serious trouble so there is no reason to panic as many are financially sound.

Cardy says there may be little point for investors in troubled split-caps to sell now but they should review their financial plans to see if they should be changed in light of the fall in values.

Best Investment deputy managing director Jason Hollands says it is “important to remember that the problems related to cross-holdings and gearing only affect a sub-group of splits and others have been oversold”.

IFA firm Kohn Cougar suggests that investors would be wise to switch into investment trusts from unit trusts or Oeics where the investment trust is similar but is offering a discount.

IFAs are also warning clients not to abandon regular-savings schemes due to volatile stockmarkets.

Hargreaves Lansdown head of research Mark Dampier says: “Most worryingly, some investors are cancelling regular savings plans, particularly those who started over the last five years when it would have been better to have it in a building society.”

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