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Lazard intoduces a fund of funds transfer Pep

Lazard Asset Management hopes to attract Pep investors who hold several plans by offering a one-stop-shop. It&#39s Active Transfer Pep allows investment in Lazard&#39s own unit trusts plus a selection of external fund managers.

Daly reckons this approach may appeal to clients who want less complication. He says: &#34There are always people who want a simpler life and prefer to consolidate all their various Peps with one provider under one roof. Psychologically, with Peps finishing in April 1999, many people may wish to transfer their holdings into one manageable Pep.&#34 But Migeod sees no particular place for this in the market. He says: &#34This offers none of the advantages offered by Skandia and is just as expensive. I cannot see a clear advantage to recommend this to a new or existing client.&#34 McNeil calls it a quality product but still only suitable for a niche market. Taylor adds: &#34This is a multi-manager fund of funds unit trust Pep with the selections made by Lazard as opposed to the client or IFA.&#34

Discussing the suitability of the plan, Daly says: &#34This is for those clients that have managed to accumulate at least £10,000 by utilising previous tax year&#39s Pep allowances.&#34 Migeod thinks its appropriate for novice investors who have a portfolio of building society Peps and require better diversification than present with existing providers.&#34 McNeil says: &#34This is for clients who have built up a wide range of Pep plans.&#34 Taylor goes on to explain why he thinks there are few clients this will appeal to. He says: &#34The growth portfolio has a grim track record over all five years shown on the factsheet supplied by Lazard, dated September 1998. On the income portfolio, the double annual charges marginalise the viability.&#34

Migeod spots very little opportunity for marketing the plan. He says: &#34The opportunities are very few and far between. Lazard is not known in the public eye as much as companies like Perpetual and Jupiter.&#34 But Daly believes it could create interest. He says: &#34Pep consolidation as a talking point with clients during review meetings could generate interest, even though the Lazard Pep option may not be the one to be considered.&#34 McNeil reckons it could prove useful by minimising the amount of paperwork involved when a client has several Pep plans. Taylor adds: &#34The issues raised by this product may enable professional planners to commence real advice for an investment strategy using Peps or individual savings accounts.&#34

Most of the panel highlight the Pep&#39s main useful features as the flexibility of income on the income portfolio and the range of external fund managers. McNeil says: &#34The range of unit trusts available are strong market names with good past performance.&#34 Daly says: &#34I like having all the funds under one Pep umbrella. The withdrawals can also be based upon a fixed percentage from 2.5 per cent a year up to 7.5 per cent. The income can also be paid out either monthly or quarterly.&#34 Taylor is in favour of spreading the Pep over a range of top funds and fund managers but warns about consolidating large sums in any one Pep. He says: &#34Clients shouldn&#39t be lured into consolidating large sums in excess of £50,000 to any one Pep.&#34

Most of the panel feel the flexibility offered is fairly average. McNeil says: &#34This is on an equal footing with others in the market.&#34 Migeod says: &#34The flexibility is fairly average. Nothing notable.&#34 Daly adds: &#34There is very little flexibility concerning investment choice which can only really suit the most passive investor. But the flexibility in capital withdrawals is extremely good and the best feature of the plan.&#34

The panel all agree that Lazard&#39s past performance record is disappointing. Migeod says: &#34The growth portfolio trust is dire and I could not recommend this to any clients at all. The income trust is a solid performer and I could use this at a pinch.&#34 Taylor goes further to say: &#34I can&#39t imagine using this product on best advice grounds, despite Lazard&#39s credible track record for many of its individual unit trusts.&#34 Daly adds: &#34Lazard&#39s own range of unit trusts have not been exciting either recently or over five and 10 years. Of the trusts it has, the growth, UK growth and income, UK capital and UK smaller companies growth, the last is the best although this has rarely got above half way in its sector. The income fund of funds has performed much better with top quartile performance over 10 years.&#34

Migeod thinks that the plan will be hard to recommend on the grounds that many clients have no perception of Lazard, which he feels lacks in name awareness. McNeil agrees saying: &#34This is not an easily recognisable name to an investor.&#34 Daly adds: &#34Lazard&#39s reputation in my experience has recently been made in the venture capital and smaller companies sector. It&#39s name sounds familiar to most people without having much reason why it should.&#34

Migeod believes the main drawback of the Pep to be the lack of exposure to funds other than in the UK. He says: &#34There is no exposure to Europe or North America.&#34 Taylor says: &#34There is limited fund switching and the charges are relatively high.&#34

Analysing the charges further, Daly says: &#34They are high as there are effectively two layers of management fees. But this is to be expected on a fund of funds approach.&#34 McNeil calls the charges moderate while Migeod says: &#34The charges appear too high for the lack of performance edge.&#34

Taylor describes the literature as functional although Migeod says: &#34It&#39s uninspiring and insipid.&#34

Concluding, Migeod says: &#34Lazard needs to advertise its brand much more in the press to achieve any hope that clients might recognise its name.&#34


(Average marks out of 10)

Range of trusts 4.5

Flexibility 4.7

Past performance 4.7

Reputation in market 4.5

Charges 3.5

Commission 6.0

Product literature 5.0


George Migeod, independent financial adviser, Dale Digby & Foreman, Paul Daly, senior adviser, Stafford House Investments, Paul Taylor, certified financial planner, Cavendish Financial Management, Nancy McNeil, independent financial adviser, Assured Investment Services.

Lazard Asset Management


Aim: To provide capital growth and/or income through investment on a fund of funds basis.

Minimum investment: £10,000.

Investment choice: Lazard income portfolio trust or growth portfolio trust which includes a range of external fund managers.

Yield: Growth – 0.5 per cent, income – 3.1 per cent which also offers a choice of capital withdrawals at 2.5 per cent, 5 per cent or 7.5 per cent.

Charges: Initial – 5.25 per cent, annual – 1.25 per cent.

Special offer: 1 per cent discount on initial charge.

Offer period: Until December 31, 1998.

Commission: Initial – 4 per cent, renewal – 0.5 per cent.

Tel: 0800 374810.


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