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Connaught Opens Fund For Investors Tired of Products

Jul 8, 2008
Connaught Asset Management has launched a Guaranteed Low Risk Income fund, which company executives said is aimed at investors who have lost their appetite for investment products.

It promises to pay a guaranteed annual return of at least 8.15 per cent, by investing in low-risk, short-term bridging financing.

Investors who put in 500,000 or more will receive the higher guaranteed annual return of 8.5 per cent, according to Nigel Walter, founder and chairman of Connaught.

All loans invested in by the fund will be secured with a first charge against a property, and also with a third-party guarantee against the lender for both the interest and the investor capital, Mr Walter said.

Capita Financial Group will manage and operate the funds, while Connaught will look after the day-to-day management of the assets, according to Mr Walter.

The fund will be marketed to investors through IFAs and wealth managers, with a minimum investment of 20,000. It will be offered as a UK open-ended limited partnership, with exempt unit trusts for Sipps and Ssass and charities, Mr Walter added.

Payments to investors will be made quarterly, and a month's notice will be required to withdraw monies after an initial six-month lock-up period.

Mr Walter said the new fund had already attracted interest from IFAs and wealth management companies that had previously invested in the company's four Strategic Land funds, three of which have closed. The fourth is due to close in June.

The fund is London-based Connaught's fifth since Mr Walter founded the company in February 2007. Two more funds are scheduled to be launched shortly, he added.

Take A Sipp!

A Sipp is a means by which you can gain greater control over the investment of your pension money which, typically, might have previously been invested in insurance companies' pension funds. All too often these funds under-performed.

Sipps offer far greater flexibility than ordinary personal pensions due to the range of investment options which are available. These include;

Stocks and shares

Unit trusts

Investments trusts

Managed funds, and Property.

This far the option to invest in property has been restricted to commercial property but, with effect from 6th April 2006 , it will be extended to residential property which will prove attractive to many potential investors.

SIPPs Advantages
As well as receiving up to 40% income tax relief on contributions, individuals are also entitled to take a tax free lump sum of up to 25% of their accumulated fund at their chosen retirement age. This can be age 50 and upwards (55 as from 2010). All of the time money is invested within the fund it remains tax free being subject to neither income tax, capital gains tax, nor inheritance tax.

Allowing for the fact that you do not have to cash a policy to purchase a pension via an annuity, but simply draw from the fund whilst leaving it invested (subject to certain limits), this is particularly attractive. Effectively your money can remain in a tax free environment for many years during which you have full investment control.

Are you approaching retirement?
Whilst the possibility of being able to draw an income from your pension fund is attractive, we believe that it is very important to have maximum investment flexibility. A Sipp is therefore essential. If you are approaching retirement and would like to use a Sipp to draw your pension please contact us. We'd be pleased to show you how you might be able to use the "Open Market Option" on your existing pension to make this possible.

Improved access to information
In the past details about your pension may only have come by way of an annual statement. Many Sipp providers have up to date valuations which can be viewed securely over the internet 24 hours a day.

Property Investment
How to turn a 160,000 net investment into 481,735 in only seven years.! It sounds a little like a get rich quick scheme doesn't it? However, that is how the property market has worked to some degree over the last few years.

Property is therefore a very attractive option for Sipp investors. The following illustration indicates why (see note):

An individual has a pension fund valued at 100,000 and wishes to top up their fund by a contribution of the same amount. This will be mainly funded by the sale of shares using their annual capital gains tax allowance. The net cost to the investor is 60,000.

The investor is permitted to borrow, via their fund, a further 100,000 making possible a property purchase of 300,000. The property is let at a rate of 1,500 per month and this rent is used to pay off the outstanding loan. This is achieved some seven years later during which time the value of the property has increased to 481,700, assuming a reasonable growth rate of 7% per annum in the property market.
About the Author
Nigel Walter is a Asset Investment expert who generously shares his expertise with budding UK investors. For more information Contact Nigel Walter at Connaught Asset Management.
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