View more on these topics

Isa on the cake for L&G


Distribution Trust

Type: Unit trust

Aim: Income and growth by investing in corporate bonds and equities

Minimum investment: Lump sum £500, monthly £25

Investment split: Investment-grade corporate bonds 54%, high-yield
bonds 15%, UK equities 30%, cash 1%

Isa link: Yes

Pep transfers: Yes

Yield: 4.9%

Commission: Initial 5%

Charges: Initial 5%, annual 1.25%

Special offer: Initial charge reduced to 4 per cent

Offer period: Until April 30, 2004

Tel: 020 7528 6773

Legal & General&#39s distribution trusts is a unit trust aims for income
and growth by investing in investment-grade corporate bonds,
high-yield bonds and UK equities.

According to Ronald Blue & Co managing director David Flowers, this
is a well-timed entry to the market. He says: “L&G has a good track
record in distribution funds and launching one that is two-thirds fixed
interest plays well for the Isa tax treatment changes in April 2004.

He thinks the 4.9 per cent yield is okay, but is not sure the fund
should be regarded as low-risk when nearly half of the fund is made
up of equities and high yield corporate bonds. He says: “There are a
few managed distribution funds around &#45 for example New Star has
recently launched one with a similar split. The competition will be
dictated by charges and marketing.”

One criticism Flowers makes of the L&G fund is that it is not cheap.
He explains: “It shows a reduction in yield of 2.1 per cent for a regular
savings &#45 so definitely not a CAT standard product. It would probably
be cheaper to select a good equity fund and a separate fixed-interest

On a positive note, Flowers thinks the autoswitch facility, which
automatically invests £7,000 of investors&#39 money into L&G&#39s
distribution Isa each tax year, is useful. However, he adds that an IFA
would want to override the fund selection if they were giving
meaningful ongoing investment advice. He also likes the brochure,
which he describes as “a pleasantly cool blue” but finds fault with its
omission of how often the 4.9 per cent yield is paid.

Summing up Flowers says: “For investors with smaller amounts this
provides a good entry to a lower risk product that maintains tax
efficiency within the Isa wrapping and yet keeps some exposure to
potential equity-orientated returns.”

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

Overall 6/10


Destini buys top-end Bloomsbury

Destini has made its fourteenth purchase this year with a deal to buy Bloomsbury Financial Planning. London IFA Bloomsbury is run by Sofa director Jason Butler and Campbell Edgar and has six RIs, with four being qualified financial planners. The fee-based company specialises in advising clients with assets of more than £1m. Bloomsbury managing director […]

Pat on back for Portman

PORTMAN BUILDING SOCIETY TWO YEAR FIXED RATE Type: Two-year fixed-rate mortgage Fixed term: Fixed until December 1, 2005 Fixed rate: 4.25% Minimum loan: £15,500 Maximum loan: Up to 95% of valuation subject to a maximum of £250, up to 90% of valuation subject to a maximum of £400,000, up to 85% of valuation subject to […]

Midshires links up with L&G for cover deal

Birmingham Midshires is to refer its mortgage custo-mers exclusively to Legal & General for insurance pro-ducts from spring next year. The two companies have entered into a new partnership which will mean that Midshires&#39 customers will be referred to an L&G insurance consultant who will explain the range of cover available. Products will include life […]

MP presses for equity-release regulation to avert misselling

A Labour MP is calling for the Government to take action to regulate all areas of equity release, including home reversion, to head off a “huge” misselling scandal. Barry Gardiner will raise his concerns over the “exponential growth” in selling in this area of the mortgage market with Treasuryfinancial secretary Ruth Kelly at an adjournment […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm