Natwest stepped bond good idea?

Question
Is investing in the Natwest fixed rate bond issue 221 a good idea?Answer
This is a three year savings account that pays interest of 1.98% p.a. in year 1, 3.93% in year 2 and 5.84% in year 3. You can withdraw your money before maturity, but you’ll be charged a rather penal 270 days of interest.

The interest, paid monthly, must be credited to a Natwest current account or instant access savings account, which risks you earning very little subsequent interest unless you move the money elsewhere. Natwest will also only pay the Bank of England base rate, currently 0.5%, on money put into the bond until the start date of 18 October 2018.

These so-called ‘stepped rate’ bonds are a bit of marketing gimmick as they’re really just a fixed rate bond offering a rate equal to the average paid over the term. Banks like them as it means they can highlight very high interest rates when promoting the account, even though these rates will only be paid in the latter years.

This Natwest bond pays an average annual fixed rate of 3.92% over the three year term, which is reasonable but you can earn more elsewhere:

ICICI Bank pays 4.15% (4.08% monthly interest) on its HiSave 3 year fixed rate bond, although withdrawals are not allowed. And the AA offers a competitive 4.10% (4.02% monthly interest) on its 3 year fixed rate bond, which allows withdrawals (albeit with up to 270 day’s loss of interest).

As for investing in fixed rate savings accounts more generally, I think they’ll probably fare well versus a variable rate account over the next 2-3 years. The ‘best buy’ fixed rates offered are currently somewhat higher than the most competitive easy access accounts and I doubt interest rates will rise by much, if anything, over the next the couple of years. But you’ll need to be comfortable tying up the money, as it may be expensive or impossible to get your hands on it before maturity.

Read this Q and A at http://www.candidmoney.com/questions/question270.aspx

Painful school fees

School fees have hisortically risen by more than double inflation. Is there a way to ease the financial pain?.

It’s that time of year when the parents of around half a million children across the country prise open their cheque books and hand over a hefty sum to pay for private school fees.

The figures make painful reading. Over the last school year fees averaged £3,365 per term for day schools and £8,003 for boarding – multiply by 3 (terms) and then pay out of taxed income...ouch!

There’s a bit of consolation in that fees last year (and, from what I can see, this year too) have only risen by about the same as inflation (4% last year and I reckon 3-4% this year). Historically they’ve raced ahead of inflation.

Soaring fees can partly be explained by a private school’s main overhead being teaching staff (typically half of overall expenditure), as earnings tend to rise faster than prices. But average earnings over the last 9 years have risen about 30%, versus 66% for average day school fees and 56% for boarding (prices, measured by RPI, rose 27%). You can view a chart here.

So there’s little doubt, in terms of affordability, that school fees are more expensive than ever. But if you’re keen to give your child a private education is there anything you can do to lessen the financial pain?

Unless your child enjoys a scholarship or bursary then there are really only four options open to you: save a bucket load of money before they start school, earn more, borrow, or receive help from relatives (e.g. grandparents).

While savings money before your child starts school is a nice idea, in practice you’ll need to save a substantial sum to make a meaningful difference. Let’s say your child attends private day school between ages 11-18; that would cost about £80,000 (assuming fees increase 4% a year, but ignoring other costs e.g. uniform and trips). To fund this fully from investment you’ll need to have saved around £55,000 by the time your child is 11, equivalent to about £300 per month over the 11 years (assuming 6% annual return). Save what you can, but don’t expect it to fully solve the problem.

Use our School Fees ‘How Much’ calculator to see how much educating your child privately might cost.

Earning more or receiving help from relatives, if you can, is the simplest option. It might even help your parents reduce a potential inheritance tax bill. But neither is always feasible.

Borrowing should be a last resort and only really makes sense if you can do via your mortgage, else the cost could be prohibitive. If you have decent equity in your home then releasing some of it via a competitive re-mortgage is likely to be the most sensible option.

If you want to see how school fees might dent your overall finances use our School Fees ‘Affordability’ Calculator.

Finally please be very wary of financial advisers offering ‘school fees plans’ and/or ‘specialist school fees advice’ – it’s just a load of marketing baloney. Sadly there are no nifty or magical solutions, short of winning the lottery. You just need to prepare yourself to save, invest, borrow and work very hard...

You can read more on our school fees page.

School fees figures sourced from the Independent Schools Council.

Read this article at http://www.candidmoney.com/articles/article144.aspx

Hold or sell Sun Life of Canada shares?

Question
Windfall shares ex Sun Life of Canada, now known as Sun Life Financial - holding of 951 shares.

Should I sell now?Answer
At the time of writing Sun Life Financial shares are trading at about 24 Canadian dollars (£14.60) each, which values your holding at around £14,000 – a nice windfall.

However, difficult markets have taken their toll on the share price, which has fallen almost a quarter over the last year. The fortunes of Sun Life Financial, like most financial companies, depend on investment performance in general. These types of company tend to be the first to benefit when stockmarkets are rising and the economic outlook rosy, but during troubled times they feel the pinch quicker and harder than most.

A quick glance at the company’s latest quarterly report highlights this pretty clearly. Net income during Q2 2009, a period when markets were generally recovering, was C$591 million. Fast forward to Q2 2010, when markets were hurting, and the net income plunged to C$213 – taking the share price with it.

The same report also estimates that a 10% move in stockmarkets could affect net income by C$125-175 million on the upside and C$175-225 million on the downside.

So, in simple terms, holding the shares is a fairly aggressive bet on wider financial markets and economies.

If your outlook is positive I’d hold onto the shares and if it’s negative consider selling them.

My own view is pretty negative re: the economic/stockmarket outlook for at least the next couple of years, although bear in mind I could be wrong (in some ways I hope I am).

Alternatively, if you’re unlikely to need the money for a few years you could take the view that markets will recover at some point and as Sun Life Financial appears a robust company (rated ‘very strong/excellent’ by the major agencies) it’s worth just holding on to the shares until their price returns to a more appealing level.

If you do decide to sell watch out for capital gains tax - the acquisition cost of windfall shares is deemed to be zero so the full proceeds will be taxable. But you can use your annual capital gains tax allowance (currently £10,100), if available, so spreading the sale over two tax years or giving some shares to a spouse (to use their allowance too) should avoid having to pay any tax.

Read this Q and A at http://www.candidmoney.com/questions/question269.aspx

Mortgage endowment prospects?

Question
Our Standard Life Endowment Mortgage, which we took out in Nov 1987, is not going to make its promised investment pot and like many other missold policy holders, we are now facing the inevitable financial worry about finding £25,000 to pay off the shortfall. Fortunately for us we have now put £25,000 to one side to pay off this shortfall.

Do you think Standard Life investments are going to have any reasonable growth for our final 2012 endowment payout? Answer
Your endowment invests in Standard Life’s with-profits fund. The idea behind with-profits is to invest in a mix of stockmarkets, gilts/corporate bonds (called ‘fixed interest’) and property then hold back some profits in the good times with a view to using them to prop up returns during the bad times – so you receive a consistent annual return (called a ‘bonus’). If there’s any held back profit in your pot at maturity then this is paid out as a ‘final or ‘terminal’ bonus.

Your 2012 payout will depend on the annual (also called ‘reversionary’) bonuses until then and the final bonus on maturity. These, in turn, depend on the performance of the underlying with-profits fund (especially the final bonus).

The annual 2010 bonus on Standard Life traditional with-profits fund (likely to be your mortgage endowment invests in) is 0.25% on the sum assured and 0.35% on bonuses already added. So don’t get excited at the prospect of making money via annual bonuses.

The final bonus is much harder to predict as it depends on how much, if any, held back profit is earmarked for you as well as underlying fund performance between now and maturity.

I’d start by asking Standard Life for a current surrender value and projected maturity value. This will show how much your policy is worth now and how much it might be worth at maturity based on an assumed underlying fund growth rate. Comparing the two will give you some idea as to how fund returns affect your final payout (although bear in mind the surrender value might include an early redemption penalty).

Will the fund grow? It returned 3.8% over the first half of this year but it’s very difficult to guess the future, as markets are so unpredictable these days. On the bright side around 59% of the fund is currently invested in fixed interest and cash, with 29% in stockmarkets and 12% in property, reducing the risk of losing money over the next couple of years - as the bulk of the fund is held at the safer end of the investment scale.

Fingers crossed markets oblige and you make more than expected from the endowment.

Read this Q and A at http://www.candidmoney.com/questions/question268.aspx

Better way to assess fund managers?

Could measuring the impact of fund manager decisions be a better way to measure their performance?.

I learned last week that Lord Myners came up with a wizard way to measure the performance of fund managers. Put simply, it is the ratio between what the manager’s portfolio actually achieved over a time period, and what it would have achieved if the manger had not bought or sold anything at all.

This would lay bare the impact of the fund manager’s decisions, all of which, of course, cost money because they incur expenses. A bunch of academics have had a go at it, and in two out of three trials, the ‘inertia’ portfolio came out on top over three years.

This would seem to be a great way to shine some light on the unit trust business. Coupled with all cost disclosure in pounds and pence, it could improve the information available and so make the market work better.

Expect no interest in either idea from the regulator.

Read this article at http://www.candidmoney.com/articles/article143.aspx

Can China continue growing up?

China has recently overtaken Japan to become the world’s second largest economy; can it continue its almighty ascent as an economic superpower?.

In my opinion the answer is yes. Although I don’t expect the path to greater prosperity will be a smooth one.

China’s gross domestic product (GDP – i.e. total annual economic output) is around $5 trillion. The US is the largest world economy with a GDP of about $14.2 trillion while the UK is in 6th place on $2.2 trillion.

However, at 1.34 billion, China’s population is over four times bigger than that of the US (310 million) and over 20 times bigger than the UK (62 million). So although China’s economy is massive, its average citizen is still quite poor in the scheme of things. Even taking into account the local cost of living, Chinese GDP per capita ranks 99th in the world at $6,567, versus the US in 6th place at $46,381 and the UK in 19th place with $34,619 (Qatar tops the list with $83,841).

The reason for mentioning the per capita figure is that it highlights just how much more scope there is for China to grow. Sure, there’s a risk of falling demand for Chinese exports from the West if our economies continue to struggle, but the scope for Chinese domestic growth is mind boggling – provided its population becomes steadily wealthier.

For example, just one in three people have internet access and only one in six have a credit card - the popularity of both is growing fast. But while the communications and financials sectors look the most explosive shorter term, it’s growth in the motor industry that offers massive longer term potential. Currently the Chinese own 41 cars per 1,000 people – in the US it’s over 900.

China also has the advantage of being pretty autocratic (thanks to its communist heritage). While this might not be great for human rights (which is a concern), it does mean that things get done, fast, which is helpful when overhauling a country’s infrastructure.

But ongoing growth in China won’t be plain sailing. Aside from the usual developing world issues of politics and corruption, there’s still a huge disparity between the rich and everyone else. The Chinese government is trying to address this and the disparity should narrow over time, but a more even distribution of wealth will be key to sustaining the growth in domestic consumer demand.

Chinese currency is also likely to strengthen versus others over time (China relaxed its currency peg in June), making Chinese exports more expensive which could hurt foreign demand for Chinese goods and services.

And high growth risks high inflation (which is bad because it stifles investment), although inflation appears to be under control, so far. A stronger currency should help in this respect too as it’ll lower the cost of imports.

On balance I believe the prospects look very good for the next 10-20 years. But have Chinese stockmarkets already priced in high growth on company valuations?

Chinese companies are currently priced at an average 20 times their annual earnings on the Shanghai Stock Exchange and 37 times their earnings on the Shenzhen Stock Exchange. This compares to an average 13.6 times earnings for the FTSE All Share Index.

So, yes, higher growth is priced in, which reduces the scope for shorter term profits unless growth (expected or actual) is higher than anticipated. But longer term this is less of an issue and I don’t think it jeopardise the case for investing in China over a 10-20 time horizon.

(GDP figures sourced from the IMF).

Read this article at http://www.candidmoney.com/articles/article142.aspx

Standard Life GARS fund change for better?

Question
Changes to fund investment policy.

In April it looked a good time to switch a proportion of investment out of equity long funds so some was moved to the Standard Life Global Absolute Return Strategies R which had been having a good run. The performance since has been very decent: the SL GARS fund is 6% up whereas the FTSE is now around 10% down. (SL factsheet: http://uk.standardlifeinvestments.com/O_M_Gars/O_Q_GARS/getLatestOEIC.pdf )

I've now had a notification from HL that from 20 Sept there are to be changes to the fund's investment policy although I can't see anything about it on their website to point you to. In brief, they say that currently the fund invests in other collective investment schemes but now intends to move away from that to direct investment. They say the intention is to bring benefits to us investors from economies of scale but personally, until it's broken, I'd prefer they didn't mend it. Too often funds seem to run into problems if they get to large.

I wondered what your thoughts were and how these kind of changes tend to go?Answer
The Standard Life Global Absolute Return Strategies fund (GARS) is one of the few absolute return funds that’s generally delivered what’s on the tin since launch (May 2008). It’s done so by investing around 60% of the fund in Standard Life funds (i.e. collective investments) and using the remaining 40% cash to bet on market movements across a wide variety of assets (e.g. stockmarkets, currencies, fixed interest and interest rates) using derivatives.

The underlying Standard Life funds provide a ‘core’ investment exposure across stockmarkets, fixed interest and property, while the derivatives are used to provide both protection and the potential for positive returns during falling markets.

Standard Life wrote to unit holders on 12 July outlining its intention to restrict the fund’s collective investment exposure to 10% from 20 September 2010, instead favouring direct investment in securities (e.g. shares and bonds).

If we assume that the real ‘added value’ on this fund is from the derivatives exposure, then moving to from Standard Life funds into direct investments should not pose much threat to performance. I expect funds will continue to be used for property and specialist stockmarket exposure, while direct investments will be used for mainstream stockmarket and fixed interest exposure.

But why is Standard Life trying to mend a machine that doesn’t appear to be broken?

I’d guess they either genuinely believe using direct investments will be more efficient and cost effective, or they’re concerned that the level of investment in their own funds via GARS is becoming too high (I reckon it’s already over £2 billion).

I suspect it may be the latter, as the underlying fund costs appear to be minimal (after checking with Standard Life). They confirmed that the underlying fund costs are not included in the 1.5% GARS annual management charge but instead charged as an extra expense to the fund which is included in the total expense ratio (TER). Given the GARS TER is 1.6%, only 0.1% higher than its annual management charge, this suggests the underlying fund costs are negligible (it doesn’t quite add up to me, but Standard Life have confirmed this is the case).

In general changes to a fund’s strategy tend to be a mixed bag. Some are eminently sensible, e.g. where a fund is clearly failing and strategy change could breathe a new lease of life. But on other occasions it simply signals an attempt by a fund manager to increase the scalability of their fund so that they don’t have to cut off the hand that feeds them by closing their doors to new business.

In this instance it looks like the latter, although I don’t see it as a particularly negative move. Provided Standard Life puts sufficient resource into direct investment selection then there’s no reason to suspect the fund can’t continue to deliver healthy performance. I think there’s a greater risk of performance turning sour due to the managers making some bad bets on the derivatives side of the fund rather than poor stock selection on the conventional side.

Nevertheless, rapid fund growth is always a concern as it places more strain on the manager. Provided they primarily invest in large, liquid investments then it may not be a problem – Neil Woodford has proved a large fund need not necessarily be a performance handicap – but it does invariably reduce a manger’s practical investment universe. The GARS management team appear to be coping well so far and I hope they continue to deliver, but I would keep an especially close eye on the fund over the next six to twelve months in case it shows signs of faltering.

Read this Q and A at http://www.candidmoney.com/questions/question265.aspx

Employer's pension expensive?

Question
My daughter is just coming uo to the age of 40. The company she works for has been taking her pension contributions for some three years but, as she recently found out, has not been putting the money into their pension scheme. They have now offered her the full amount of her contributions (£2,300) and have recommended a company in which to invest. They want to charge £250 as an upfront cost and some £63/year for the advice and future admin.

Please can you tell me if this is a fair amount for such a small investment?Answer
It’s pretty worrying that your daughter’s employer took the money but didn’t invest it – they must be in breach of pension rules...

However, on the plus side had the money been invested in the stockmarket over the last three years she’d have probably lost money, so the error is probably a blessing in disguise.

The initial charge of £250 is prohibitive on the £2,300 lump sum (equal to nearly 11%), although if your daughter remains at the company until retirement it’s less of an issue longer term as it’s a one-off charge. The £63 annual charge is again pretty steep as this equates to over 2.5% a year on £2,300. Again, it will become more palatable as her pension fund grows in size, but it seems excessive at present.

The key is whether these charges are the only ones your daughter will pay, or whether they’re on top of underlying pension fund charges. For example, if the company runs their own money purchase pension scheme with no extra charge for underlying investment management then these fees are probably reasonable provided your daughter is likely to remain at the company for a number of years.

But if, as is more likely, these are simply charges bolted onto a pension scheme with its own charges, such as a group personal or stakeholder pension, then I think the charges could prove crippling on her modest pension contribution.

Your daughter should check whether her employer also makes contributions on her behalf (as part of her employment package). If so then the pension may still be worthwhile as the charges will probably be easily outweighed by the employer’s contribution. But if not, or her employer allows their contributions to be placed into a pension of your daughter’s choice, then she’ll probably be better off using a stakeholder pension. They’re cheap (the only allowable charge is an annual fee of up to 1.5% for the first 10 yearsthen 1% therefafter) and very flexible.

The £63 annual charge seems to include provision for advice, which your daughter might find worthwhile. Although with a bit of common sense choosing a stakeholder pension and underlying (funds) is pretty straightforward so she should be able to cope quite happily without advice.

She can read more about stakeholder pensions on our stakeholder pension and choosing a personal pension Action Plan pages.

Read this Q and A at http://www.candidmoney.com/questions/question267.aspx

Use a fund of funds?

Question
I want to invest £200 per month into fund ISAs. I'm now 51 yrs old and looking to boost my savings for possible retirement at 60. I have looked at various fund of fund schemes with e.g. Hargreaves and Bestinvest but am not sure whether this is my best option. If I were to take a more active role myself can you possibly give me some ideas where I could allocate my monthly savings?Answer
I’ve mixed feelings about fund of funds.

On the one hand they provide a straightforward way to get exposure to wide range of investments with modest sums of money. For example, for £200 monthly contribution could access maybe 20 or more underlying funds via a single fund of funds. And you should, in theory, benefit from a skilled manager who monitors the portfolio and buys and sells funds accordingly so you can get on with more interesting pursuits.

The downside is that funds of funds are more expensive than conventional funds because there’s an element of double charging. You’ll pay an annual charge (typically 1.5%) to the fund of funds manager as well as annual charges (typically up to 1%) to the underlying fund managers. So fund of funds tend to have total annual charges of between 2-2.5% - quite expensive.

If you have a portfolio of around £20,000 or more I think it’s probably more flexible and cost effective to use conventional funds via an investment adviser who provides good advice in return for the trail commission received. Otherwise I think a good fund of funds is likely to be a worthwhile and practical option.

Whether you use a fund of funds, or build your own portfolio of individual funds, I think the key is to ensure a wide spread of investment. Trying to accurately predict the top performing investments of the future is very haphazard, so it makes sense to hedge your bets across areas including stockmarkets, fixed interest, property, commodities and absolute return style funds. The optimal mix will depend on how much risk you’re comfortable taking and whether you require an income.

Both Hargreaves Lansdown and Bestinvest run fairly well regarded funds of funds, but there’s plenty of other choice too – for example the Jupiter Merlin range of funds managed by John Chatfeild-Roberts, who has a very strong track record.

Once you’ve decided which fund(s) to buy take a look at our ISA/fund discounts comparison to find the cheapest way to buy.

Read this Q and A at http://www.candidmoney.com/questions/question266.aspx

Charges on reinvesting fund income?

Question
Some time ago I bought income units in an equity unit trust from a discount broker and automatically reinvest the income in new units. Recently I read that some fund managers make no initial charge whilst the policy of others is to levy the full initial charge on such new units. This could amount to quite a drag on returns over the long term. Which fund managers levy the full initial charge on income unit reinvestments?

If accumulation units are available would be worth my while paying the 0.25% fund supermarket switching charge to change my holding from income to accumulation units? Answer
Thanks for raising an often overlooked issue. When you buy an income producing unit trust there’s usually the option to buy income or accumulation units. Income units pay out the income while accumulation units simply increase the unit price to reflect the income being retained in the fund. Either way income is still taxable, but accumulation units are convenient if you want to reinvest income back into the fund.

It’s also possible to reinvest the income from income units, but historically a few fund managers have levied an initial charge on the new units purchased, potentially costing you 5% or more. This is a greedy practice and thankfully not very common these days, but it’s certainly something to watch out for.

How do you find out if your fund manager levies this charge? In theory it should be detailed in a fund’s simplified prospectus/key features, but it’s not always specified so you might have to phone and ask. Ideally units should be purchased at either the creation or bid price, which means no initial charge. Purchase at the offer price means an initial charge (see our unit trust page for more details on fund pricing).

Fortunately fund supermarkets don’t seem to levy an initial charge for reinvesting income. FundsNetwork confirms that reinvested income is not subject to an initial charge in its key features document. Cofunds and Skandia don’t make this clear in their literature, but on checking they both confirmed that there’s no initial charge when reinvesting income (Skandia will only take a charge if the adviser elects to take commission).

I also checked about a dozen of the larger fund managers and they all either reinvest income with no initial charge or convert income units into accumulation units free of charge – either way a fair result.

I believe a few fund groups do still charge for reinvesting income but I’ve not managed to find any. If any readers know of offenders please post below!

As you hold your funds via a fund supermarket you should be fine. But if there is a 0.25% switching charge, then assuming a 5% initial charge and 3% annual income it’d take around 2 years to profit from the switch.

Read this Q and A at http://www.candidmoney.com/questions/question264.aspx

Bestinvest client centre errors?

Question
I currently have a number of unit trust investments with Bestinvest, but am thinking of moving to HL (or ?) as I have concerns about the quality of their data on the investments, as presented in their Client Centre webpage.

The particular problem is that about a quarter of my recent Sell transactions, as presented in their Transactions History webpage (Fundsnetwork transactions), were missing. This has now been almost put right, but not quite. I asked for the reason for all these mistakes but no explanation has been given to me. I now have considerable doubts about the quality of the other data in their Client Centre. I been with Bestinvest for many many years and like their quarterly summaries of the portfolio so I would be a reluctant mover.

Can you comment on the differences between HL and Bestinvest with regard to the type of data routinely posted to clients and the analyses available via their websites?

[subsequent update]
I have been through the changes in my Transactions Histiry printout in detail and find that whilst some omissions have been corrected, Bestinvest have now inroduced a load of duplicated entries - I despair!Answer
The fund transaction data that really matters is held by the underlying fund supermarkets/platforms, such as FundsNetwork, Cofunds and Skandia etc - or by the fund provider if you buy from them rather than via a platform.

If this information is wrong you’ve got a problem, as it means you don’t actually own what you think you do, e.g. you’ve sold some unit units but the platform hasn’t actually recorded or carried out your instruction. Thankfully these types of errors aren’t that common and if the platform does mess up a deal they should correct their error and ensure you’ve not lost out.

As part of their service fund platforms provide web access to your investments so you can view your holdings and transaction history. Most advisers and discount brokers simply provide their clients with access to these services via their websites, i.e. they display content generated directly by the platform(s).

The downside with this approach is that if you hold funds across several platforms or fund providers you can’t view everything on one screen as the information is held across several different systems - you’ll need to log into each platform/provider website separately.

Bestinvest tries to overcome this shortcoming by using its own system/database to bring together all your fund holdings and transactions from the various platforms and providers in one place, i.e. its client centre.

When it works it’s a good system as it makes viewing your whole portfolio straightforward and provides useful information on how your portfolio is exposed to different company sizes, regions and asset types, using data from the underlying funds.

However, the system relies on a combination of manual updates by Bestinvest and data imported from platforms and fund providers, increasing the scope for error, as you’ve experienced.

The good news is that the error is more likely to be Bestinvest’s, rather than a problem with your actual fund transactions as recorded by FundsNetwork, but nevertheless it’s an inconvenience. At the very least you should receive an explanation as to what’s gone wrong and re-assurance of the steps being taken to prevent a repeat in future. It’s disappointing Bestinvest was unable to provide this to you.

Should you transfer to another discount broker?

While others are catching up, Bestinvest’s online client centre facility is still pretty good (when there are no errors!). If you like this facility and benefit from no-fee investment advice (available on portfolios of £50,000 and over) then I’d be inclined to stay provided you can get re-assurances that they’ll fix the problems you’ve encountered and prevent a future re-occurrence.

Hargreaves Lansdown (HL) won’t give you advice, but because they run their own fund platform (Vantage) I’d expect the likelihood of errors within their client centre to be lower versus Bestinvest. I’m not a client, but feedback from HL clients on this site suggests that when there is a problem/error, HL is usually quick to sort it. You’ll also benefit from a partial trail commission rebate on most funds, typically saving you 0.25% a year.

At the other end of the scale are discount brokers like Cavendish Online, who don’t offer research or portfolio tools but do rebate trail commission in full – saving you up to 0.5% a year. They’ll simply provide links to a fund platform so your online valuations and analysis will be restricted to that provided by your chosen platform(s). A great deal if you want a bare-bones service, but less appealing if you rely on fund research and portfolio analysis tools.

Unfortunately neither Bestinvest nor Hargreaves Lansdown offers access to a ‘sample’ client centre account, so you can’t try before you buy, which seems short-sighted. As I’m not a client of either I can’t give you a detailed comparison, but based on the information I’ve seen via friends who are clients I believe the quality of the fund research and portfolio analysis information offered by Bestinvest eclipses that of HL - but then HL is usually cheaper and probably offers a more robust service.

You can view a comprehensive comparison of discount brokers in our ISA Discounts Action Plan.

Read this Q and A at http://www.candidmoney.com/questions/question262.aspx

Continue delaying state pension?

Question
I Deferred my State Pension for 3 years and have had an indication of the extra now available.

The extra pension (as at 1 August 2010) is estimated at £41.71p per week, giving a total pension of £159.00.

Or

A lump sum £20,272, subject to Standard Rate Tax.

I am age 71, single and have a comfortable investment portfolio. My current non-inflationary Occupational Pension is £19,500 per annum.

Please advise some options I might consider or avoid.Answer
Your first decision is whether to take your deferred state pension now or continue waiting.

If you don’t need the money then your state pension will continue to increase by either 0.2% per week until claimed (equal to 10.4% a year), or the value of the unclaimed payments plus annual interest of 2% plus base rate (so currently 2.5% a year).

Should you continue deferring and pass away before taking the pension (or lump sum) then the executor of your will can decide whether to request the lump sum or, if applicable, that the pension is paid to a surviving spouse.

You might find our State Pension Delay Calculator helpful to compare various scenarios, but I guess the main factor affecting your decision is whether you need (or can make better use of) the money now rather than in future.

If you decide to take the pension now then you’ll need to choose between the higher ongoing pension and the lump sum. Both are taxable, but the lump sum would simply be taxed at your current rate - that is it can’t push you into a higher tax band and won’t affect your increased age-related personal income tax allowance.

Whether the higher pension or lump sum is a better choice depends on how you look at it.

Your extra weekly pension of £41.71 is equal to about £2,169 a year. To buy an inflation-linked pension of this amount via an annuity would cost you around £42,000 (based on current rates), so from this point of view the extra pension is better value than the £20,272 lump sum.

However, if we assume inflation (CPI) of 2% then it would take about 9 years for the sum of the extra pension to equal the lump sum, i.e. to reach breakeven (and longer still if you successfully save or invest the lump sum).

So, without wishing to sound morbid, the decision between taking the pension and lump-sum largely rests on how long you expect to live – especially as you’re single because there’d be no benefit from a spouse’s pension.

The average life expectancy for a male aged 71 is 87 years old (see our Calculator), in which case you’d probably profit from taking the higher pension versus the lump-sum.

But, of course, few of us actually end up being ‘average’ so you’ll ultimately need to use your own judgement when deciding what to do.

I hope this gives you some food for thought and best wishes whatever you decide.

Read this Q and A at http://www.candidmoney.com/questions/question261.aspx

Company tax on gambling winnings?

Question
If my company gambles upon horse-racing and wins are the profits tax-free ?Answer
I’m not 100% confident about my answer, but my understanding is that yes, gains from gambling winnings are exempt from corporation tax. This seems to be confirmed in the following HMRC document (look about half way down under "Capital Gains Tax and company gains within Corporation Tax").

However, If your company’s sole trade is gambling then I think there’s a good chance winnings would be taxable, but losses would then be a deductible expense too, so you’d only pay tax on net winnings (if any).

I’d suggest double checking with your accountant for clarification – and if any readers can help please post below.

Read this Q and A at http://www.candidmoney.com/questions/question259.aspx

Are banks safe again?

Question
How safe is Nationwide and Santander? We have over £50,000 each in both but have another lump sum to invest in either one, two or 3 year bond - we know the FSA compensation scheme covers just £50,000 per person, per institution but didn't the last government give an assurance that no-one will lose money in a British bank and will the present government continue with this assurance?Answer
The worst of the global banking crisis appears to be over and despite the threat of rising bad debts (especially if recession kicks back in) the likelihood of a household name bank or building society going under looks slim. But that’s not to say it couldn’t happen, so you’re right to be wary.

Both Santander and Nationwide are more focussed on retail banking (i.e. taking money from savers and lending it out at a profit to borrowers) than investment banking (the so-called ‘casino’ type of banking where traders speculate in search of profits). In theory this puts them at the safer end of the banking scale (but that’s safer...not safe!).

Within retail banking both have a reputation for being fairly prudent, so in the scheme of things I think it’s highly unlikely either will go bust.

Nevertheless, I’d refrain from holding more than the £50,000 covered by the Financial Services Compensation Scheme (FSCS) with any bank or building society (where practical) for another year or two. We’re still in challenging economic times and things could get worse again, so I don’t think it’s worth taking an unnecessary risk (even a very small one) with your savings.

There’s no explicit government guarantee beyond the £50,000 covered by the FSCS. In practice I think a developed world government would always step in to rescue a stricken retail bank (provided it could afford to) as the reputational risk of a retail bank sinking with savers’ money is too great to bear. But FSCS compensation is the only thing you can rely on.

Some good news in this respect - the amount covered by the FSCS is due to rise from £50,000 to €100,000 (about £83,000 at current exchange rates) from 31 December this year thanks to the bureaucrats in Brussels.

If you exceed FSCS compensation limits with Santander and Nationwide I wouldn’t lose too much sleep. But ideally I’d suggest spreading the money across sufficient providers to ensure you’re fully covered.

Read this Q and A at http://www.candidmoney.com/questions/question256.aspx

Metro Bank...the verdict...

Metro Bank has burst onto the banking scene with a fanfare, claiming it’ll revolutionise banking by being fair, exciting and convenient – even your dog can enjoy free treats in its ‘stores’. Well actually, that should read ‘store’ – it has one branch at present (in Holborn, London), but plans to open 39 more over the next four years, all open seven days a week. You can also bank by telephone 24/7 with plans for internet access on the horizon.

While free dog biscuits and smiley banking assistants are nice gimmicks, what really matters is how competitive its products are, so let’s take a look.

Current Account

The selling point is a debit card (Mastercard/Link) that doesn’t charge commission on overseas spending and cash withdrawals. Otherwise there’s no interest when in credit and you’ll be charged 15% EAR when overdrawn (authorised and unauthorised). When in overdraft paid items are charged at £10 and unpaid at £5, both limited to a maximum 6 items per month.

The overdraft interest rate is ok (the average is around 19%), but there are better deals available. Nevertheless, it’s a nice straightforward account that should prove useful if you spend lots of money overseas.

Credit Cards

Metro Bank’s credit card is a Mastercard charging 13% APR and has no commission on overseas spending or charges on cash withdrawals. Purchases can be interest free for up to 60 days provided you repay your balance in full each month. There’s no penalty for late or missed payments, you’ll just continue to incur interest on the money.

If you repay your balance in full each month then a cashback card would likely be a better choice. And if you use a credit card to borrow then a 0% or lower interest deal makes more sense. So while this card is fair, it’s not really a best buy for anyone, although it is worthwhile if you’re a heavy overseas spender and pay off your balance each month.

Personal Loans

There’s one rate, 10% APR, that applies to all loans regardless on duration and amount (you can borrow between £1,000 - £25,000). You’ll probably need a decent credit rating to get a loan, but there are no arrangement fees or penalties for repaying early, which is a big plus. 10% is unlikely to be most the lowest rate you’ll get, but it’s pretty competitive nevertheless.

Savings

The easy access savings account is a big disappointment with a variable interest rate of just 0.5% at the time of writing. There are one and three year fixed rate bonds paying 2.5% and 3% respectively - ok rates but off the pace (by about 0.5% and 1.3% respectively) and you can’t access the money until maturity.

Verdict

Retail banks make money by borrowing cheaply from savers and lending at higher rates to borrowers, and despite its revolutionary claims Metro Bank is no different. It does however deserve praise for doing away with hidden/penal charges and generally offering its customers a straightforward and fair deal.

The trouble is, while offering a fair deal across the board is commendable, it’s also Metro Bank’s Achilles heel. The reason some banks building societies can afford to offer market leading rates on savings and borrowing is that they’re making excessive profits from existing customers elsewhere (e.g. paying 0.1% or less on savings accounts and/or charging top whack overdraft and credit card fees).

So if you like to shop around for the best deals and don’t mind using different providers for different products then Metro Bank is not for you.

But if you value simplicity and knowing you’re getting a fair deal with no hidden nasties, then Metro Bank should prove a breath of fresh air. Only hassle is you’ll need to visit London to open an account until more regional branches open up.

Read the full review at http://www.candidmoney.com/candidreviews/review39.aspx

Which fixed rate savings?

Question
We have £58K to invest - we are only interested in safety of one, two or three year bonds. We notice the Post Office is only offering one bond - is there a reason for this and is the Post Office safe.

The only other option we have looked at is Barnsley Building Society - the interested is 3.05% for a one year bond which seems quite good. We have used ISAs for the year and we have max premium bonds.Answer
The only other option we have looked at is Barnsley Building Society - the interested is 3.05% for a one year bond which seems quite good. We have used ISAs for the year and we have max premium bonds.


I’ve just had a quick look on the Post Office website and the one fixed rate savings bond that it was offering has now closed. Post Office savings accounts are provided by the Bank of Ireland, so I guess they don’t have an appetite for raising money via fixed rate products at present. Given the outlook for interest rates looks pretty flat and the Irish economy is in a sorry state I don’t blame them.

Bank of Ireland savings accounts bought via the Post Office are safe in so far as they’re covered by the Irish Deposit Guarantee Scheme. This covers unlimited amounts up to 29 September 2010 and €100,000 per institution per person thereafter. The scheme is as safe as the Irish Government that backs it – credit rating agency Moody’s recently cut Ireland’s rating to Aa2, but this is still pretty safe in the scheme of things and not worth losing sleep over.

The Barnsley one year fixed rate, now 3%, is attractive, although eclipsed slightly by ICICI Bank at 3.1%. Both are covered by the UK Financial Service Compensation Scheme (FSCS), which guarantees the first £50,000 per institution per person.

If it worth tying money up beyond a year?

I think it’s likely interest rates will remain low for at least the next two years because our economy is troubled and I can’t see things improving sufficiently to warrant interest rate rises for quite a while yet. There has been some noise in the papers about rates rising to combat high inflation but I can’t see it – inflation is currently caused by oil prices and the VAT rise, not us all spending more.

Nationwide will pay you 3.75% on a two year bond and over three years you can get 4.3% fixed from Bank of Baroda (an Indian Bank, but it’s covered by the FSCS).

So, yes, if you you’re comfortable tying up money on a fixed rate beyond a year I’d give it serious consideration. Of course, I could be proved wrong, so a sensible compromise might be to split the money between rates of different durations. Perhaps put at least enough money on a one year rate to use your cash ISA allowances next year.

Good luck whatever you decide.

Read this Q and A at http://www.candidmoney.com/questions/question255.aspx

Charge of the press brigade

The newspapers have discovered compound interest, or have they?.

The last few days have treated us all to faux outrage on investment charges. If you save over 30 years and the product provider charges you 2% of the fund per annum, you can calculate that about a third of everything you have put in plus investment growth has disappeared in charges. The banks and insurance companies are presented as the biggest rippers off.

My view is that if you’re saving for a pension with either, you want your head examined unless of course you are sitting on a fruity guaranteed annuity rate, in which case you would be certifiable to give it up anytime close to retiring.

You can do your own thing in a SIPP. Not least, you can mix active and passive funds to control risk and cost at the same time. If you want to find out whether it’s worth switching out of a pension policy, get a transfer value and calculate what return you have made on your investment so far. Compare that with what you would have made in a sensible Tracker fund. Fidelity has one with an annual charge of 0.30%. If your Bank or Life company is doing heaps better than the Index Fund, maybe it will be best to stay put. But if not?

Best of all, find a decent IFA. Do it now. It could save you a fortune.

On a completey different topic, I came upon a fancy black envelope in the ammo box outside the front door (we have no letter box) earlier this week. It was addressed to my wife, so I had to wait to find out what was in it. I am excited beyond words. NatWest are launching a credit card that will, among other things, do your ironing.

It costs £250 a year, has a minimum £15,000 credit limit, and an annual interest rate of just 12.42%. And it’ll book a hotel room at three in the morning, after it’s finished the ironing. It is however exclusive to customers with a minimum income of £75,000 a year.

Two things struck me. First, how on earth did they figure out that Mrs Laws earns £75,000a year. She doesn’t. She’s a pensioner, like me.

Secondly, my bank pays sweet fanny Adams interest on the few bob I keep there. I’ve checked and NatWest also pays sweet Fanny Adams. So they borrow at 0% or thereabouts, then lend at 12.42%, or much more for some credit cards.

Which only goes to demonstrate an eternal truth about banking: the genius of the business is that it convinces you that you are a customer. You aren’t, you’re a supplier.

Read this article at http://www.candidmoney.com/articles/article136.aspx

Do price comparison sites offer the best deals?

Price comparison sites are a booming business. And judging by their expensive (but annoying) advertising campaigns they’re fighting tooth and nail for your custom. But will they give you the best deal? And could you save money buying via cashback sites such as Quidco and Topcashback?.

I’ve taken a look at a range of popular products and services to find out (all quotes obtained on 4 August 2010, Quidco used as an example for typical cashback):

Car Insurance

Moneysupermarket came up with the lowest quotes by some margin, while Direct Line (which has a policy of not featuring on comparison sites) was significantly more expensive. Interestingly, esure was a lot more expensive when trying to buy directly, even with a £45 cashback, than the same policy via a price comparison site.

Adding an extra driver to your policy can be a nifty way to reduce your premium, as our sample quotes show. I guess some insurers view this as lowering risk – it’s always worth a try. I routinely add a relative my policy, as well as lowering my premium it gives them an extra car to drive.

Website	Insurer	Best Quote single driver (annual)	Best Quote extra driver (annual)	Cashback via Quidco
Moneysupermarket	esure	£455	£402	n/a
GoCompare	esure	£496	£468	£1.50
Compare the Market	esure	£503	£427	50p
Confused	esure	£508	£468	50p
esure		£581	n/a	£45
Direct Line		£892	£977	n/a
Quotes obtained for a 40 year old male living in NW1 on a 2007 Saab 9-3. 5 years protected no claims, social use only, £250 voluntary excess. Extra driver is a 60 year old female.

Verdict

Based on this example it seems that price comparison sites do come up with competitive car insurance quotes, some more so than others. If you have time it’s still worth checking against some direct insurers, but on the whole you can be fairly confident of getting a reasonable deal.

Life Insurance

Moneysupermarket again came up with the cheapest quote. Confused also delivered a good quote when taking into account the potential £52.50 cashback, although it’ll still cost more than Moneysupermarket over the 20 year term assumed.

LV= provides decent cashback via Quidco but higher quotes when trying to buy direct compared to via comparison sites and brokers – a poor overall deal. And discount broker Moneyworld-IFA was cheaper than the comparison sites except for Moneysupermarket.

None of the price comparison sites makes it clear that for many people it makes sense to write life insurance benefits into a simple trust (to avoid the payout becoming part of your estate for inheritance tax purposes should you die).

Website	Insurer	Best Quote (Monthly)	Cashback via Quidco
Moneysupermarket	Aviva (via theidol.com)	£5.00	n/a
Moneyworld-IFA	LV=	£5.21	n/a
Confused	Aviva	£5.44	£52.50
Compare the Market	Aviva	£5.37	n/a
GoCompare	Aviva	£5.40	n/a
LV=		£6.39	£53.00
Quotes obtained for a 30 year old non-smoking male for £100,000 of level term assurance cover over 20 years.

Verdict

With the exception of Moneysupermarket, the comparison sites were not as competitive as a good discount broker.

Home Insurance

The price comparison sites produced similar quotes except for Confused, which I suspect interpreted my input differently from the other sites – although the cover appeared to be the same.

Esure, a direct provider I’ve used in the past came up with a staggeringly high quote, even after £45 cashback.

Website	Insurer	Best Quote (Annual)	Cashback via Quidco
Moneysupermarket	Ibuyeco	£74.59	n/a
Compare the Market	Ibuyeco	£75.13	50p
Confused	ING Direct	£79.33	£1.00
GoCompare	Ibuyeco	£95.29	£1.50
Esure		£243.50	£45.00
Quotes for £40,000 contents insurance (£1,000 away from property), 1 bedroom flat in NW1, no voluntary excess.

Verdict

The price comparison sites appear to work well for home insurance, with not that much to choose between them.

Travel Insurance

Accurately comparing travel insurance quotes is very difficult, as levels of cover and excesses vary widely. The comparison below isn’t perfect, but gives a reasonable reflection on how the comparison sites stack up.

Moneysupermarket appears to beat the other comparison sites, but independent website EssentialTravel came up the cheapest when its generous 17% cashback is taken into account. One thing’s for sure, this is likely a far cheaper route than buying cover through a travel agent.

Website	Insurer/Broker	Best Quote (Annual)	Cashback via Quidco
Essential Travel		£67.07	17% ( £11.40 on this quote )
Moneysupermarket	Top Dog	£61.50	n/a
Compare the Market	Travel Insurance Club	£66.80	n/a
Confused	Top Dog	£67.80	n/a
GoCompare	A-Z Insurance	£78.16	n/a
Annual worldwide multi-trip cover for a couple aged 40, including baggage and personal items cover, excess in the region of £50.

Verdict

The comparison sites did ok and provide a convenient way to compare multiple policies, but you could bag a better deal going direct via a cashback site. Whichever policy you choose check the levels of cover very carefully to ensure they’re adequate and beware ‘bargain’ quotes that have a sky high excess.

Electricity/Gas

I tried a few price comparison sites and the suggested energy providers and plans that could save me money were identical. Based on this I’d suggest using a price comparison site to find a suitable energy supplier/price plan that will save you money and then buy via cashback website.

The going cashback rate appears to be around £20 for switching electricity or gas and £40 if you switch both. Far better you pocket this money than a price comparison site.

Verdict

The price comparison sites don’t appear to have special deals, so bag yourself some commission by switching policies via a cashback website.

Telephone/Broadband

Much the same story as electricity and gas. The comparison sites generally produced generic quotes that were the same as going direct to telephone and broadband providers. Far better to buy via a cashback website and pocket about £50 or more in commission.

Verdict

Buy via a cashback website.

Saving

The price comparison websites can help you find ‘best buy’ savings accounts. But be careful, they tend to display accounts that pay them commission more prominently over those that don’t, so you might have to dig to find the best deals. Cashback websites may offer one or two deals, but the cupboard tends to be rather bare when it comes to savings accounts.

Moneysupermarket has started to offer exclusive market-leading deals which could be worthwhile; they’re currently promoting a ‘best buy’ Bank of Baroda fixed rate savings bond.

Verdict

Ok at helping you find decent rates, but not as transparent as they could be.

Investment

Price comparison websites have largely avoided investments, which is just as well given the occasions I’ve seen them try (moneysupermarket and fairinvestment) it’s been implemented badly. They’ve either a linked a financial adviser or a random selection of potentially unsuitable investments that just happen to pay a decent commission to the comparison site.

Verdict

Investments don’t really suit the price comparison model – avoid.

Overall

Price comparison sites are money making machines that operate on two simple principals. They want as many people as possible to visit their website and get a quote (hence the annoying ads) and then as high as proportion as possible to subsequently buy something (which relies on competitive quotes and/or your laziness). Don’t ever forget they’re in business to take your money.

Nevertheless, when running the above examples price comparison sites generally performed better than I expected. They certainly don’t offer the best deals across the board and some comparison sites seem to offer consistently better deals than others, so it pays to be wary (and choosy). But used carefully they can offer a convenient way to cut the cost of insurance.

When it comes to utilities you’ll almost certainly do better by using a cashback website (using a comparison site to highlight the best deals).

Savers might find comparison sites useful for hunting down best buys, but price comparison sites currently serve no useful purpose or investors.

I’d be really interested to get your feedback below. What’s your experience of price comparison sites? Have you found better deals elsewhere? And, if so, where?

Read this article at http://www.candidmoney.com/articles/article135.aspx

Invest in Aberdeen Latin American?

Question
Is the Aberdeen Latin American Fund worth investing in?Answer
Aberdeen has two Latin America funds: Aberdeen Global Latin American Equity, an offshore fund based in Luxembourg, and Aberdeen Latin American Income Fund, an investment trust due to list on the London Stock Exchange on 16 August 2010.

It also has a Latin America closed end fund listed on the New York Stock Exchange. While not very practical for UK investors, it has a long term track record which is useful as the offshore Luxembourg fund, launched in July this year, appears to be run by the same management team.

I’m afraid I know very little about the offshore fund as Aberdeen has yet to publish investor factsheets or information, but the management team has a good track record running the US-based fund. And, if the Luxembourg fund is run similarly then expect a high weighting to Brazil followed by Mexico, with the financial, commodity and consumer sectors dominating.

If this is the fund you’re referring to I’d suggest also looking at the First State Latin America fund and the iShares MSCI EM Latin America ETF as alternatives.

The investment trust, Aberdeen Latin American Income Fund, intends to tap into the rich vein of dividend income currently on offer in Latin America. Aberdeen anticipates an initial target yield of 4.25% with income paid quarterly. Around 60% of the fund will be invested in shares with the balance in government bonds (i.e. the equivalent of gilts).

The fund will be run by Aberdeen’s Global Emerging Markets team which, as mentioned above, has a decent track record in the region. Their management fee will be 1% with other costs expected to be between 0.5% - 0.9% depending on how much money the launch raises, so the overall cost could end up being fairly expensive.

Is the Latin American Income Fund a good idea?

I think there’s a strong argument for having long term exposure to the Latin America region. Despite high(ish) shorter term volatility the longer term prospects look encouraging. In simple terms the region has made a mint from selling commodities to the rest of the world, which has fed through to growing domestic demand for financial services, shops, telecommunications and, of course, commodities.

The income target, coupled with Aberdeen’s fairly cautious management style, should help reduce volatility, which is no bad thing for most investors. However, dividends are a far less established concept in Latin America compared to the UK, so if the region goes through a difficult patch you may find dividend payments shrink.

The usual investment trust risks apply, i.e. the share price may fall to a discount of the net asset value, although gearing is likely to be a modest 10%.

All in all, the fund is an interesting idea that appears to offer a way to get Latin American exposure without excessive risk. Nevertheless, the risks are still quite high and you could lose money, so I’d only suggest only risking a small proportion of your overall portfolio in the region.

Read this Q and A at http://www.candidmoney.com/questions/question252.aspx

How to invest overseas?

Question
What is the best way to invest in the foreign market and what are the tax charges?

If I were to buy international shares, is the dividend paid in pounds?Answer
The simplest way to invest in foreign markets is to use investment funds, such as unit/investment trusts or exchange traded funds (ETFs).

This saves you from having to research and buy shares in overseas markets and because they’re usually priced in pounds (including dividends) you don’t need to mess around with foreign currencies. Dividends and capital gains will also be treated as per UK investments provided the fund is based (domiciled) in the UK.

There are potential downsides. You’ll have to pay an annual management charge (of up to 1.5% or more) to the fund manager and there’s no guarantee he or she will do a better job than you. And unless the manager hedges currency exposure your investment will still be affected by currency movements. But on the whole funds remain the most sensible way for most investors to access foreign markets.

If you’re concerned about a fund manager doing a bad job then consider a fund which simply tracks an overseas stockmarket index – a few unit trusts do this and there’s plenty of ETFs to choose from.

Buying shares in larger US and European stockmarkets is pretty straightforward as several UK online stockbrokers offer this facility. The stockbroker will handle currency conversion, so payments (including dividends) will enter and leave your trading account in pounds, although they’ll normally add a margin of around 0.5% every time they change currency.

Dividends paid by foreign companies are often subject to a withholding tax in the country they’re listed. These vary but often tend to be about 15%, which is the amount HMRC will usually let you offset against UK tax owed on the dividends (10% for 20% taxpayers and 32.5% for 40% taxpayers) – view the list of HMRC double taxation agreement rates here. However, some countries do have higher withholding tax rates, which can mean losing out where it’s not straightforward to reclaim the tax from the overseas tax authority (France is a problem, as is the US if you don’t complete a W-8BEN form).

Capital gains tax is usually the same as UK shares, as it’s rare for overseas withholding taxes to apply to gains on shares.

Whichever route you choose, just be careful to ensure you understand what you are buying. For example, the spread of investment between different markets, sectors and companies can vary widely on funds that invest globally. Some also have UK exposure which risks duplicating investments you may already own.

Read this Q and A at http://www.candidmoney.com/questions/question251.aspx