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It now appears that a number of split capital investment trusts will not provide the hoped-for growth in capital shares after all. Not many years ago, these complex instruments were staple fare for expert financial planning. If you wanted capital growth, then you just had to have a split capital investment trust. Apologists currently point to the fact that only a small proportion of these trusts are affected; since none were affected two years ago, one has to ask how many more may suffer in the future?
Wonder stories have a habit of unravelling. To emphasise the point, we have just learned a wonder fund is now 284th out of 285 over 12 months. The excuse? " .. very unfortunate to experience a 2½ year bear market..".
It also seems the public are voting with their feet by refusing to buy equity ISA's this year. Full marks! The recent advice to plunge into equities again will, we believe, eventually turn out to be as misguided as the advice to buy splits.
What a pity those investors who listened to the split experts and wonder fund expert did not listen to us and stick to Gilts and US Treasuries. At least then you know your fixed capital repayment and income until maturity, which is more than can be said for most advice. Our message is, ignore the latest advice to plunge into equities, it will also unravel in time.
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