Financial advisers seeking alternative income streams in the current economic climate could do worse than consider protected unit trusts for their clients, says Close Investments.
Roland Kitson, sales and marketing director at the company, says the products offer the necessary security for consumers in a bear market as they are able to “cut through” market volatility.
He says the idea of investing - or switching - money into protected trusts will, in the midst of a credit crunch, prove “extremely appealing” to advisers and investors.
Protected unit trusts are designed to provide returns linked to stockmarket growth with capital protection - usually 95% or 100% - in the event of a fall. Charges can vary, often between 3% and 5.5% initial and between 1% and 1.25% annual, while minimum investment is usually the standard £1,000.
“Protected unit trusts are going to be an extremely important tool for advisers in the coming months,” Kitson says.
“None of us know how long this [the credit crunch] is going to go on for and people are going to want something that feels like cash but is not cash.”
Kitson says Close is set to embark on a campaign to promote its four 12-year-old protected unit trusts, which it calls its Escalator range. They include the UK 100 and 95 funds, the World 95 fund and the European 95 fund.
“The idea that anybody out there will be able to time their way in and out of the market is laughable,” he says. “Not one of us can do that.
“To have a product which removes that time risk and cuts through that volatility and, over the medium to long term, produces decent returns, is very attractive.”
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