Which Fund Out Of These Is Better??

I work for a company who have offered their employees a Bonus Saver Plan. You can save between £10 and £250 a month for 3 years with a fixed interest rate of 5.67% gross/5.5% AER.
There is also a potential bonus if the company meets its performance targets. If the company does not meet its targets, no bonus will be paid. Its a low risk scheme so you get all your money and the interest at the end of 3 years.

On the other hand, I popped into HSBC and they offered me a JP Morgan Emerging Markets Plan. This is a high risk plan investing money in the Asia market. The stocks are diversified. The maximum I can save is £7000 (ISA).

Now I'm confused which one to get. I just want more for my money at the end of the term. I don't have a mortgage so a high risk plan is not out of the question. I'd prefer a higher risk because of the potential returns.

I've read online that there is no point investing in Emerging Markets. Anyone want to shed light on this?

Are there any other plans you guys would recommend??

Thanks

Hi Pudha, I'm not an IFA and you would need to consult with one for a formal analysis.

I did however work as an authorised advisor back home for a few years so here's my sixpence:

No idea why people say there is no point in investing in emerging markets. Equity and money market rates of return in South Africa for example are much higher than here in the UK. Often more than twice as much. My RA (ISA) invested in SA has delivered almost 30% over the last two years. Bear in mind however that investing offshore exposes you to an extra level of forex risk that does not apply to a local investment.

Your company plan will yield approx £9,520. This is zero risk.

£8,259 is approx what £7,000 would earn you over 3 years at the 5.65%. You need to earn at least 6 or 7% for your £7,000 lump sum to beat the company offer. In terms of passive investments (mutual funds/ ISA's/unit trusts/OEICs etc) 3 years is short term and you should not put your cash in equity.

IF I was you I would do both. With regards to forex risk the primary factor to consider with longer term exchange rates is relative inflation and purchasing power parity. All else equal you would expect the country with the higher inflation rate to have a weakening currency. Tough call. Why? Cos if China Fund A (for example) grows by 10% and the Yen depreciates by 10% then your money does bugger all! Research available local funds within your price range and look for consistent performance and low annual costs.

Good luck.

erm, *yuan

also I meant almost 30% per annum (28,64%pa) growth primarily generated from investec equity http://196.30.227.162/Udt/Data/0008/0006/Fund.HTML fund and allan gray equity fund http://www.allangray.co.za/unit_trusts/performance.aspx

*over&out*