The launch of the Gartmore stable growth fund, which will invest
predominantly in zero-dividend preference shares, is of note for a couple
First, the new fund is being offered as the only rollover vehicle – other
than cash – for investors in the Gartmore Scotland investment trust. This
applies whatever class of share the investor holds.
There are currently four classes of shareholder, if one includes the
package units. So the group seems to have adopted an unusual approach, with
the vastly differing needs of the capital, income and zero holders becoming
as one. It would seem that one size really does fit all and, in basic
terms, the trust is being unitised.
The second point of note relates to the fund charges. The annual
management charge of 1.5 per cent is the highest within the mini-sector and
is on the expensive side, even allowing for the effect of the lower initial
charge. The latter is offset by an exit charge that remains in place for
five years although, should some hapless executor dispose of the investment
following the death of the holder, then the exit fee will still apply. I
see this as an irritating and unnecessary feature, however minor.
These minor considerations aside, the product is reasonable and provides
further armoury to the zero sector. IFAs and clients require low-risk
alternatives and zeros fit the bill. Given the annual charge problem, I do
not think there is a clear-cut case to prefer Gartmore over the likes of
Exeter, Aberdeen, Investec and Framlington. With a little more thought,
the product could have stolen a considerable march on the opposition.
Michael Owen is
joint managing director of Plan Invest