Swap shop

By DAILY MAIL REPORTER
Updated: 19:00 EST, 2 January 2001

Do you have a small shareholding that is more trouble than it's worth? You could get rid of it and swap your shares for unit or investment trusts.

This is because a unit or investment trust invests in a whole range of shares, so your investment doesn't depend on the performance of a single company.

But you can swap your small packages of shares for unit or investment trusts, without first having to sell the shares then using the cash to buy into the trust. However, you need to find the cheap deals as share exchange deals are not always attractive. What you are looking for is a charge that would be less than the cost of selling the shares through a stockbroker.

Indeed, a dwindling number of investment and unit trust companies now offer share exchange. Others are relatively expensive - the giant Alliance investment trust charges £25 per holding, as does Fidelity, which, if you are talking about a small number of shares, is probably more than you'd pay in stockbroking charges.

However, if you've got another company's unit trusts or Oeics (open ended investment companies), then Fidelity does not charge you for swapping into its trusts.

Chase Fleming, however, charges £12.50 for share exchanges into any of its funds - though if you have Bradford & Bingley shares, the charge is just £7.50 until 26 January. This compares favourably with the cost of selling a small amount of shares through a stockbroker.

But you still need to make a minimum investment of at least £1,000 - so if your share packages are worth less than that, you will need to make up the difference in cash.

If you are just adding to an existing Chase Fleming unit, investment trust or Oeic - whether in or outside an individual savings account (Isa) - then the shares you want to exchange must be worth at least £250. If you have a Chase Fleming investment trust savings plan, then the shares you want to swap must be worth at least £100 and your initial investment must be at least £400.

Valerie Ashton, from Walberton, West Sussex, has just swapped her British Aerospace shares for units in Chase Fleming's UK dynamic fund, held in an Isa. She chose Chase Fleming's share exchange scheme on the recommendation of her husband Michael, a retired horse racing vet. Valerie says : 'I have had the BAe shares for a great many years, but I decided I'd be better off moving into a unit trust. It's the first time I've done a share exchange, but it seems to me to be a good idea.' Not only did she swap her BAe shares, but she also topped up her investment with cash.

Aberdeen Asset Management's share exchange scheme allows you to swap a minimum of £1,000 in shares in any quoted UK company into any of its 23 investment trusts. The transaction costs £15 plus VAT (£17.62) and Government stamp duty of 0.5%.

However, if you want to go into Aberdeen's unit trusts or into an Isa, then for values of less than £2,500 there is no charge for share exchange: over that, the cost is £15 per shareholding.

Before you consider a share exchange, you should make sure that you are happy with the unit or investment trust you're swapping into. There is no point in just going for a share exchange because it gets rid of irritating small packages of shares if you don't pick the right one.