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L&G moves into corporate bonds

Legal & General is targeting its high income trust at investors looking to move into corporate bonds.

This unit trust is also available as an individual savings account (Isa) and has a yield of 8 per cent a year. Investments made into the high income Isa have no initial charge or withdrawal fee, which are good features. However, there are exit charges in the first four years on investments that are made outside the Isa. These charges reduce from three per cent in the first two years to two per cent in years three and four.

The yield of 8 per cent may be higher than some corporate bond funds, but this is achieved only by investing in non-invstment grade corporate bonds. This is riskier than similar funds which tend to invest mainly in investment grade bonds and have a lower target yield, usually in the 6-7 per cent bracket.

The fund is suitable for fairly cautious clients who are looking for high income, perhaps for retirement, and who might want to enjoy the tax advantages of an Isa.

According to Standard & Poor&#39s, the Legal & General fixed interest fund is ranked 16 out of 59 funds based on £1,000 invested on a bid to bid basis with net income reinvested over three years to December 18, 2000.

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