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io introduces inflation beater

IO INVESTORS

io InflationPlus

Type:
Oeic fund of funds

Aim:
Income and growth in excess of UK inflation by investing globally in fixed-interest funds and equities

Minimum investment:
Lump sum £1,000

Investment split:
100% fixed interest funds and equity funds

Isa link:
Yes

Pep transfers:
Yes

Charges:
Initial 5%,
annual 1.5%

Commission:
Initial 3%,
enewal 0.5%

Special offer:
Initial charge reduced to 4%

Offer period:
Until February 28, 2004

Tel: 0870 2404568

io Investors has unveiled the io inflationplus fund, an Oeic fund of funds that aims for income and capital growth of 5 per cent above UK inflation. The fund will achieve its objective by investing in funds which in turn invest globally in corporate and government bonds and equities.

Lewis & Co director Gary Bottriell is wary of this fund but thinks there will be a demand from the more adventurous investor. However, he is largely unimpressed by the fund. He says: “It is difficult to see a coherent correlation between the stated objective &#45 a significant total return in excess of UK inflation and to avoid underperforming index-linked gilts &#45 which is a fairly easy target. It will invest in other collectives in lower-grade bonds, equities and Government debt.”
In Bottriell&#39s view, the literature is a bit turgid but he adds: ” At least we are saved the glossy bumpf. The remuneration is average and the charges are acceptable . Whether it is a good for this IFA and his clients, I doubt.”

Bottriell complains that the risk/reward balance seems out of kilter, with too much risk for what seems not enough upside. He also thinks it is potentially illiquid in that it is linked to the manager&#39s view of the net asset value of possibly illiquid holdings.

Bottriell says: “Ultimately this fund would not suit any of my clients., although in fairness they are all like me, a pretty conservative bunch.” He feels better established funds with a track record will provide the main competition for the fund along with ordinary equity and bond funds.

BROKER RATINGS:

Suitability to market: Average
Investment strategy: Poor
Charges: Average
Adviser remuneration: Average

Overall 5/10

W

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