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Were
you one of the many thousands of investors who, during
the 13 years that PEPs were in existence, contributed
towards the many billions of pounds that were ploughed
into them? If so, it's probably time that we had a
PEP talk!
It's
good to talk
The rules that applied to PEPs were restrictive when
it came to constructing a balanced and diversified
portfolio. A large proportion of whatever you invested
in a PEP had to be held in either the UK or Europe.
As a result, it is estimated that today the majority
of all monies now held in PEPs are invested in UK
funds. The fact that such a high percentage of private
capital is invested in the UK means that these investments
are totally at the mercy of the ups and downs of one
stock market.
Rule
changes
If you find yourself in this position, please talk
to us so that we can discuss how you could rebalance
your portfolio through a PEP transfer. Put simply,
this is the movement of your funds from one PEP manager
to another. Now, the much more flexible ISA rules
on where investor capital can be invested also apply
to PEP transfers. Therefore, if you want to transfer
your PEP out of a UK or European sector fund into
one based in the US, Japan or an emerging market,
there is nothing to stop you doing this.
The Treasury now also allows money you hold in single
company PEPs to be bundled together with funds held
in your general PEPs. This means that you can now
move large sums from single to collective equity investments
while still keeping them within a PEP, thereby reducing
your exposure to risk.
Finally,
let's not forget about partial PEP transfers. If your
PEP is divided between a few funds - some good performers,
others not - it's now possible to transfer out of
the under-performing funds while retaining any investments
that have paid off.
Levels
and bases of, and reliefs from, tax are subject to
change. Because these investments may go down in value
as well as up, you may not get back the full amount
invested. Exit penalties may apply. Values of income
and/or growth may fluctuate while any a transfer remains
pending.
article
dated 05/2003
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