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Sector switch boosts zeros

The newly created UK zeros sector should boost interest in funds which invest in the much criticised share class, according to Investec Asset Man- agement.

Zeros, which were at the centre of the split-cap scandal, had until recently been lumped in the UK other bond sector, which contains a hotchpotch of virtually incomparable funds. But Investec says the new sector should highlight the ability of zeros to deliver “tax-efficient equity exposure at low risk”.

In particular, it says zeros funds are well suited to investors seeking to utilise their capital gains tax allowance, which is currently £8,200.

Alastair Mundy, Investec&#39s capital accumulator fund manager, says the bad press that engulfed zeros during the height of the splits scandal has masked the fact that there are many quality zeros in the market.

He says: “Today, the market has sorted the good from the bad and, with the other defensive option, corporate bond funds, at risk from rising oil prices and growing inflation threat, zeros should once again be considered by the cautious investor looking for lower-risk growth.”

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