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4 July 2002

Searching for a safe pair of hands

Disappointed investors who want to pull out of technology stocks - or any other sector, for that matter - might want to take a look at the share exchange scheme offered by Scottish Investment Trust.

In simple terms, you trade in your shares for a stake in the £1bn trust, a broadly-based fund that is independently managed by Ian McLeish and his team in Edinburgh.

You can hold them in an Isa to save on tax and if you want to top up your holdings you can do so with periodic lump sums or through a monthly savings plan.

All of which suggests that this could be an option for investors who want an orderly exit from a self-managed portfolio, but are seeking a better long-term return than a deposit account's.

The trust's 17.3% return over the past five years is not going to make millionaires out of its investors. In the six months to April, however, its net asset value rose by 5.4% against a benchmark of 3.6%.

Mr McLeish is regarded as a safe pair of hands who knows how to play the long game.

The trust first put money into Wood Group 18 years ago when thoughts of flotation were not even a twinkle in the directors' eyes. The annual return on that has been 16% to 20%, so that every £100 that the trust invested at the start was worth more than £2,000 when the oil services group came to market this year.

Most UK equities and some gilts are accepted for the share exchange scheme, subject to a minimum value of £1,000 (€1,557) in total. The fee is £12.50 for each of your holdings.

If you put your swap into the fund's Isa, the annual charge is 0.6%, with a maximum if £30.

Business a.m. readers who have taken advantage of the scheme say that the paperwork is simple - the trust got good prices for their shares when it sold them. And the charges are very competitive.

Ken Welsby
Business AM