Cofunds is to offer a cash facility for clients of intermediaries from March 11, which will enable t...
Cofunds is to offer a cash facility for clients of intermediaries from March 11, which will enable them to hold cash within a stocks and shares Isa prior to it being invested in the equity or fixed interest markets.
The tool, which will facilitate a phased investment service later in the year, does not breach the Inland Revenue's rules forbidding cash funds to be held in an Isa because money invested is earmarked for the markets.
Following an agreement with the Bank of Scotland, intermediaries will be able to hold clients' funds in the Cofunds Cash Reserve, subject to the Revenue's stipulation that it is intended to be invested in stocks, shares or a collective investment vehicle.
Clive Boothman, chief executive officer of Cofunds, said: 'It is a stocks and shares Isa offering cash, not a mini-cash Isa. We will be sending a letter to our clients telling them this service can be used as a temporary shelter.'
Cofunds will introduce the phased investment facility later in the year, enabling intermediaries to drip feed their clients' cash into funds over a number of different time frames. Quarterly distribution will also be offered later in the year.
For the cash component of the stocks and shares Isa, minimum investment is £1,000 and no initial commission is paid to intermediaries, although trail of 0.5% is offered. Interest rates will be set at 2% below the Bank of Scotland's base rate.
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