But Gartmore has a record of tracking the market with reasonable success for more than five years. Only L&G pays commission, so don’t expect financial advisers to wax lyrical about the others. Many non index- tracking PEPs still have buy-sell costs of up to 5 or 6 per cent and annual fees up to 1.5 per cent Lower charges mean more of your money is working for you. Higher charges mean a bigger drag on performance – the fund has to do that much better just to keep level.So which is best? Virgin has made the most noise since its launch in the spring. Most unit trusts underperform the stock market, despite their claims of investment expertise.And the latest charge squeeze should help the comparison. Performing in line with the market has also made them above-average performers overall, particularly in the longer term.

If you read that the stock market is up or down 10 per cent, the value of your investment should be up or down by a similar amount. And by and large they should do that, although they do normally underperform slightly due to charges That makes their performance relatively easy to monitor. And they’re sceptical of everyone claiming top performance,” says L&G’s marketing director, Stephen Abbott.All the PEPs in the table aim simply to match the performance of the UK stock market, rather than beat it as with most PEPs investing in UK shares Hence the index or index-tracking title. None in the table are the new bond PEPs (see story below), which offer higher income but much lower – if any – potential for growth. Unless you need to take the income now, you are probably better off investing in PEPs whose underlying investments are shares.Announcing its price cuts L&G said it believed potential investors were put off by the huge choice of PEPs.

There are hundreds available, most of which are in effect tax-free unit trusts “People are confused They want simplicity. Big attractions are that income and capital gains are tax-free and you can cash your money in at any time. They also offer good prospects for above- average performance and a fairly straightforward investment aim.PEPs are the best way into the market for most people. You can stay on-line long enough to see the price at which you dealt, or wait until the next time you log on.Information transmitted on Infotrade is encrypted to protect the system from hackers. Only when the information reaches ShareLink or City Deal is it eventually decoded – even Infotrade cannot access the details of your business.

Payment is made outside the system, via direct debit, cheque or by drawing on your own cash account with the stockbroker. The possibility of transferring money using Infotrade is also being investigated.. CHEAPER Personal Equity Plans than ever before are now available. And many of these low-cost tax-free investments are suitable for first- time entrants to the stock market. Last week Legal & General launched what can claim to be the lowest-cost PEP investing in shares. It also reduced charges across a range of other plans.
It was the latest move in a hard-fought price war that really has brought better value for buyers.

Disappointing sales, too many companies competing – including some aggressive new entrants like Virgin Direct – and a desire to lure savers from the building society are combining to attack prices. Despite a lucrative year for stock market investors, the lack of a “feelgood factor” has kept buyers away.Our table lists four PEPs that are among the cheapest ways for savers to invest in the UK stock market. Additionally, there is a one-off pounds 25 connection fee for the service.The Windows-based software needed to run Infotrade, available only on CD-Rom, gives users three years of financial results for 2,500 UK-quoted companies, their price movements over the past 18 months, a description of their activities and recent share dealings by the directors.When you make a trade over the system, confirmation that your buy or sell order has been received appears on the screen immediately. To use the service, you will need a CD-Rom drive for your PC, Infotrade’s CD-Rom software and a modem to communicate along telephone wires. The software can be bought through BT or from ShareLink or City Deal (ShareLink is selling it at a discount of pounds 39.99 or free if you put pounds 5,000 on deposit with the broker for dealing). To buy or sell shares using the service will mean opening an account with ShareLink or City Deal.