Wrap update - November 2009

October saw the introduction of the increased ISA allowance for the “silver generation” (50+).  The new maximum is now £10,200 and this will be extended to everybody in April.  One can pay a maximum of £5,100 into a Cash ISA with the balance being allowed to go into an Investment ISA.  Where previously one was limited to £3,600/£7,200 for the  Investment ISA, the limit is now £5,100 if you have made the maximum contribution to a Cash ISA and £10,200 if you have made no cash deposit.
 
We also advised income investors to switch out of Standard Life’s AAA Income Fund.  According to the October 2009 issue of Money Management its one-year performance had slipped below the ML Sterling Corp & Collateral Index which had risen 4.6% over 12 months whilst the Standard Life Fund had only risen by 1.4%.  We recommended a switch into Fidelity Moneybuilder Income which is well-rated by all the Rating Agencies and has outperformed the Index over 1, 2, 3, 5 and 10 years.
 
Thoughts for the future
 
The recovery continues!  Friday 13 November didn’t bring bad luck – the FTSE closed at 5,296, having stood at 3,503 on 3 March – this equates to 51% - 5% compound per month.
 
Will it continue?  Nobody knows but the signs are promising with low interest rates, weak sterling and the economy forecast to come out of recession.  WRAP investors can be reassured that we continue to monitor all the Indices daily and our Gold clients will be informed by email when an Index goes through a particular “trigger point”.  Other clients can pick up this information from our Newsletter and Website.
 
We are also planning ahead.  New WRAP clients since 1 October have seen Invesco Perpetual High Income replaced by M&G Recovery, Newton UK Opportunities replaced by Fidelity Special Situations and Neptune European replaced by BlackRock European Dynamic.  In all cases this was because the Funds that were being replaced had underperformed the Index over at least one year.
 
Things seem to be looking up for Commercial Property as well.  We have limited exposure to this section to 10% of a client’s Portfolio but we have now suggested increases.  Furthermore, we have identified three Property Funds that we recommend to give exposure to Global and European Commercial Property as well as UK.
 
WRAP Gold clients will have these Fund switches recommended after 1 January.  Again, all other clients can email these Fund switches to us if they wish them to be implemented.