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M & G Peps smooth transition to ISAs

M&G is creating a range of Peps it claims will pave the way for the switch to Individual Savings Accounts next year.

The new Fundamentals range incorporates three existing M&G Pep funds – the corporate-bond Pep fund, the blue-chip Pep fund and the managed income Pep fund.

M&G will also be launching an index-tracker Pep fund in February subject to authorisation by the Financial Services Authority. The fund aims to track the performance of the FTSE All-Share index.

Also included in the Fundamentals range is a high-interest fund which adds a cash element to the range although it is not a Peppable fund. The corporate-bond and managed income funds both pay 3 per cent initial commission and 0.5 per cent renewal. The blue- chip fund pays only renewal commission of 0.5 per cent.

No commission is paid on the high-interest and index- tracker funds.

Corporate communications head Rachel Medill says the Pep is aimed at first-time or inexperienced investors.

She says: "We have put together a compact range of no-initial-charge Peppable funds that provides a simple way in for new investors. We have chosen our best-performing funds for this purpose."

All the funds included in the Peps have top-quartile performance over five years or since their launch date.

None of the funds has an initial charge and annual charges range from 0.6 per cent to 1.5 per cent.

The package is designed to allow investors to make a painless transition into ISAs.

Medill says: "It is vital that people investing between now and April 1999 can be certain that their Pep investments will be seamlessly transferred into an ISA – up to the Government limit – without penalty."


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