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Insight creates Isa duo

INSIGHT INVESTMENT

INSIGHT INVESTMENT FOCUS PLAN

Type: Oeic mini or maxi Isa

Aim: Income or growth by investing in a choice of six funds

Minimum investment: Lump sum £3,000

Catmarked: No

Investment choice: Income &#45 equity high income, monthly income, global bond funds. Growth &#45 UK discretionary, UK select opportunities, European discretionary funds

Yield: Depends on fund

Charges: Initial 5.25%, annual 1.15% – 1.5%

Commission: Initial 3%, renewal 0.5%

Tel: 0845 8506050

The panel: Lisa Leeland, Consultant, Martin Bown Financial Services,
John Wright, Proprietor, Investment Management Services,
Nigel walker, Investment executive, Gee & Co,
John Hill, IFA, Positive Solutions,
David Norris, Trainee adviser, Philip J Milton & Co

Suitability to market 5.8
Investment strategy 5.8
Past performance 4.6
Company&#39s reputation 6.8
Charges 4.6
Commission 6.0
Product literature 6.4

Insight Investment&#39s Insight investment focus plan is an Oeic mini or maxi Isa that provides income or growth by investing in six Insight funds, of which three provide income and three provide growth.

Considering how the Isa fits into the market, Leeland thinks it fits well and is a bit different to the norm. Norris says: “The Isa is for investors who are looking for general and relatively conservative stockmarket exposure rather than specialist sectors. It will be a good home for client&#39s money before they possibly go into more ambitious, risky sectors through other funds.” Wright says: “I see no particular merit in the income and growth options other than the simplicity in obtaining a spread of investment choice.” Walker says: “In a crowded marketplace, there are more interesting opportunities elsewhere.”

Highlighting the type of client the fund could attract Norris says: “Clients who are comfortable with investing in the stockmarket but not within higher-risk sectors. Also, clients who have not reviewed their investments for some time and who want to transfer existing underperforming Peps and Isas. The product is suitable for people who do not take an active interest in their investments ad only want a periodic review.”

Hill says: “The older client looking for incomet, but there is a growth option using the profit sweeper, which will be attractive to the cautious investor.” Wright suggests that since Halifax is part of HBOS, Insight&#39s parent group, the Isa may appeal to Halifax clients who are suffering from the affects of low interest rates. Leeland goes for medium-risk investors who understand the risks involved.”

Considering the Isa&#39s marketing potential Walker says: Some might like the profit sweeper idea, which imposes an automatic discipline. However, a carefully monitored portfolio of funds could easily be managed in a similar way.” Leeland says: “Marketing opportunities will be slightly different compared with most Isas, and will focus on the profit sweeper feature.”

Walker thinks opportunities will be very limited. Norris says: “This would be marketed as the coming together of the expertise of two highly respected companies through HBOS – Halifax and Bank of Scotland.” Wright says: “It is nothing special although the cut-off date of April 25, 2003 might spur some to action.”

Looking at the positive features of the product, Hill thinks the protection feature will be attractive to nervous investors. Leeland goes for the split of funds between income and growth, and the profit sweeper. Norris says: “The autoIsa feature, which allows clients to invest their full Isa allowance now, with the remaining part of the investment held outside the Isa wrapper until the new tax year. The profit sweeper feature would also be useful for people saving with the aim to reach a specific amount or a specific return.”

Wright says: “It is simple for experienced investors to understand. The Halifax name is also positive, as it has not been involved in investments which have lost money in the past and people trust the company.” Hill goes for the strong company image, the spread of investment and its split between bonds and equities.

The panel offer a critique of the investment strategy. Walker says: “A range of three funds within each option and the profit sweeper facility for the growth focus is a novel idea.” Leeland thinks the product looks riskier than similar Isas, particularly on the income side. Wright says: “I would like to see a better breakdown of the actual investments chosen for the various funds which make up the product. If the monthly income fund name is an equity fund as opposed to a gilt fund, the mix is a bit heavy on the equity side for some.”

Norris says: “With the exception of the global bond fund, all the funds available are either UK or European. Over the longer term, this may restrict growth potential. There is the investment choice between income or growth, not both and clients cannot choose their own funds and or how much goes into each fund, as the weightings are rigidly set. Ongoing investment will not experience diversity but simply buy more of the same.” Hill thinks the strategy is okay, but would prefer a wider range of options. Walker says: “Uninspiring in-house funds are used, although Neil Pegrum on the UK side is the manager to watch.”

Examining the drawbacks of the Isa, Leeland feels the charges are high while Norris mentions the lack of client choice in fund selection and the geographical restriction mainly to the UK and Europe. “Wright says: “It does not spell out what each of the funds is invested in as well as I would hope.” Walker says: “It is linked to generally weak funds.”

Considering the company&#39s reputation, Leeland and Wright say they have not heard much about Insight, but Wright believes its link with HBOS is sufficient to hold it in high regard. Norrris agrees. He says: “Insight&#39s reputation is still being established as it was only launched in September 2002. However, clients would be reassured when informed that Insight is the investment arm of the HBOS Group and has such well-known parentage as the Halifax and Bank of Scotland.” Hill and Walker think it is good. Walker says: “It has a strong parent company which will be a comfort to clients but this does not guarantee good fund performance.”

The panel agree that as Insight was established in September 2002, it is difficult to judge its past performance.

Identifying the main competition for the product, the panel suggest fund supermarkets, Skandia&#39s MultIsa, Prudential&#39s income and growth plan, Fidelity special situations, Newton higher income, Edinburgh performance portfolio and Jupiter high income.

Turning to charges Leeland says: “They seem a little high, but this will depend on how good the performance is.” The rest of the panel think the charges are in line with the market and agree that commission is fair.
Looking at the product literature Norris says: “It is clear and well laid out. The wording is in plain English and broken down into sub-sections for clarity. However, while the content is good, the colours used are rather dull.” Hill finds it quite good and easy to follow.

Wright thinks it is okay, but wonders why there are diamonds on the front cover. Leeland thinks it is good, but complains there are no investment performance statistics included. Walker says: “It has an interesting bear market chart but makes an argument for positive returns in 2004, which is far from certain.”

Summing up Hill says: “For those charges, it is going to have to deliver the goods.”

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