Premier Asset Management
Premier Zero Preference Fund
Aim: Growth by investing in zero-dividend preference shares of split-capital investment trusts and other closed ended funds.
Minimum investment: Lump sum £1,000, monthly £50.
Investment split: 100 per cent in zero-dividend preference shares.
Yield: 8 per cent.
Isa link: Yes.
Pep transfers: Yes.
Charges: Initial 5 per cent, annual 1.25 per cent.
Commission: Initial 3 per cent, annual 0.5 per cent.
Tel: 01483 400400.
Jeremy Marsh – Managing director, Zero.UK.Com
Ralph Stather – Sole proprietor, Retirement Options (Wearside)
Brian Pack – Principal, Brian Pack Financial Services
Scott Clayton – Principal, Professional Financial Services
Suitability to market: 5.3
Investment strategy: 5.8
Past performance: 5.3
Company's reputation: 4.8
Product literature: 3.8
Premier Asset Management's zero preference fund is an open-ended investment company investing in zero-dividend preference shares of split-capital investment trusts and other closed-ended funds.
Considering how well the fund fits into the market, Pack says: “It's a quickly developing market, so it is arriving at the right time to take up the public interest.”
Clayton feels that the fund is too unexciting for growth portfolios, and not suitable for income portfolios. He says that it has to be used as part of Premier's C-lect portfolio to make withdrawals, but mentions that it is lower risk than corporate bonds.
Stather says: “It adds to a small number of funds that are taking advantage of an increased number of zeros being issued. It also suits investors looking for low risk capital growth over medium to long term.”
Marsh says that it is the fifteenth fund in the sector with two direct competitors.
Moving on to the type of client the fund would be suitable for, Clayton pinpoints: “Retired, wealthy investor looking for an alternative to corporate bonds.”
Stather feels that it would suit investors who want higher returns than current interest rates. He also says that they would need to accept some risk to capital. The other category that he mentions are high rate taxpayers who are cautious, want income, have used up their Isa allowance and do not want bonds with early surrender penalties.
Marsh says: “Cautious investor with a diverse portfolio seeking growth over the short to medium term.”
Pack agrees that it would be attractive to a low risk investor who is purely looking for growth.
Turning to the marketing opportunities provided by the product, Stather says: “Individuals who have retired looking for a low risk growth fund, clients who want to tuck away funds for a specific purpose in five to seven years time, for example school fees, early mortgage repayment, child's marriage, start business. It will tempt very cautious clients to try equity investment for first time, especially high rate taxpayers.”
Clayton feels that the marketing opportunities will be limited. Pack says: “May well be of interest to my non-experienced clients.”
Marsh thinks that the fund will appeal to clients who appreciate the multi-manager trend.
Casting an eye over the main useful features and strong points of the fund, Clayton says it is: “Lower risk than corporate bonds.”
Pack says that the fund manager is experienced, and that the average life of holding stocks and shares is a good aspect.
Marsh calls it: “A fund that ought to be suitable for cautious investors.” He also feels that, at this point in time, zeros will offer more stability than equities.
Stather says that the fact that zeros have no yield means there will be no problems with income tax, and likes the fact that you can build up the investment by way of monthly contributions. He also mentions the fact that you can make monthly withdrawals.