Back in the week starting 29 July 1996 Investment Week was focusing on guaranteed stock market produ...
Back in the week starting 29 July 1996 Investment Week was focusing on guaranteed stock market products which contained high hidden charges built into their underlying derivatives structures.
At a time when the world's major equity markets were looking increasingly volatile, these products were being sold ever more aggressively to the retail market.
The bonds and funds effectively gave the consumer far less upside to the market than the derivatives contracts themselves provided, in some cases a difference of more than 10%. Much of the profit was taken by the investment banks which supplied the derivative packages to product providers.
Schroders was also in the news, it had just raised over £94m with the launch of its Emerging Countries Investment Trust. The fund, run by Giles Neville, took £50.7m in the placing and £9.5m from the wind-up of Schroders' Mediterranean trust , and on the last day before the offer closed had taken £34m. Rod Duncan, director of Schroder Investment Management, said: 'You always think it could be difficult following people like Templeton and Fidelity into the market, but we have done extremely well.'
Meanwhile Thornton had pulled the launch of its planned £30m UK smaller companies investment trust launch. The decision was taken on the last day of the institutional placing after it failed to reach its minimum target of £10m. The Momentum Trust, which picked small cap stocks with earnings upgrades, had projected annual total expenses of 7% and a return above this of 12.9%pa.
Mark Bliss, UK marketing executive at Thornton, said: 'It is a great shame and we are very disappointed but we had to be realistic. With the market going up and down at the moment we could not get enough support.'
It was revealed that changes to the tax treatment of life assurance policies would not take place before the next General Election. Michael Jack, financial secretary to the Treasury, announced the week before that the draft rules for taxing life assurance policies would be published before the end of the year, but would not be included in the next Finance Bill.
This meant that any changes to the rules would not be implemented during the then Conservative Government's current period of office. The ABI remained in discussion with the Revenue on both the tax status of guaranteed income bonds and on the future tax regime for life assurance policies.
Framlington was seeking to raise up to £50m with the launch of an Aim investment trust.
The fund was to be run by Brian Watson, who already managed the Throgmorton 1,000 Smaller Companies Trust, was to hold around 50 stocks.
No preferred charging model
To 1,552 families and businesses
HL and Liberty SIPP slowest
Lifetime and annual allowances