The advantages of diversification are clearly demonstrated with the success of Hibernian's Global Telecoms Fund. According to the company, if those still holding Eircom shares had instead put their money into the fund they would have seen a capital gain of 27.8 per cent over the six months ending December 1st compared to 1.5 per cent on buying Eircom at the flotation price. Past performance is no guarantee of future return.
The fund invests in some of the world's most prominent telecoms companies including British Telecom, Nokia (Finland), Cisco Systems (US), France Telecom, NTT Mobile Com (Japan), MCI WorldCom (US) and a 13.2 per cent holding in Eircom.
As a sector fund, there are inherent risks involved. Hibernian Life's General Manager, Mr Vincent Nolan, says: "While holding the prospect of high returns, these stocks can be volatile so we would not recommend them to investors who require the lower risk involved in a general managed fund."
The minimum investment is £3,000 (€3,809). Taxes are paid in the fund so encashment is free of income and capital gains tax. Charges consist of an initial 5 per cent bid-offer spread which reduces to 2 per cent for larger investments. There is also an annual 1 per cent annual management charge. The fund is available from brokers or through Hibernian.
