Fund Solution for Euro Switchover

Big changes are here for residents of the Mediterranean islands of Cyprus and Malta, and for those who are considering working or retiring there, as these countries adopted the euro as currency on 1 January 2008.

The islands, which are popular with British expats, face changes beyond how goods are priced in the shops. Residents and those considering moving there may have to switch their savings into euros, to avoid exchange rate risks from fluctuations between currency of income and currency of expenditure.

"It's a huge change for everyone in Malta and Cyprus," says Bron Lysiak of Lloyds TSB Offshore Fund Managers Limited, which has many customers on the islands.

"One now has to think in a completely different currency and it's perhaps the most fundamental economic change that can affect a country. Those who are using investment to derive an income – such as retired people or those thinking of retiring to the islands - must be careful of a possible currency risk if they do not receive their income in euros."

Recognising that increased numbers of people would wish to derive investment income in euros, Lloyds TSB Offshore Fund Managers last year launched a fund to help them do just that. The Lloyds TSB Euro High Income Fund is currently delivering 4.83% income yield as at 31 December 2007, paid quarterly, in euros.

"Whilst this level of income is not guaranteed, an attractive target yield of 4.5% delivered in euros could appeal to those who are preparing to switch their ‘home’ currency to the euro and are seeking a good income from their capital," says Bron Lysiak.

The Euro High Income Fund takes holdings in investment-grade Eurobonds and distributes income every quarter. It is backed by a good investment management pedigree, as it draws on the experience of the fixed-income specialists of SWIP – the Scottish Widows Investment Partnership. SWIP is one of Europe’s largest asset managers and is part of the Lloyds TSB Group, managing funds in the region of £98 billion. (Source: SWIP - 30/09/07).

Past performance is no guide to the future and that the value of shares and the income from them can go down as well as up and cannot be guaranteed. An investment, in a currency other than the shareholder's own currency or in a fund that invests in securities denominated in currencies other than its base currency, will be subject to the movement of foreign exchange rates. Consequently, investors may, on selling their shares, receive an amount greater or less than their original investment.

This information has been issued by Lloyds TSB Offshore Fund Managers Limited and approved by Lloyds TSB Private Banking Limited which is authorised and regulated in the UK by the Financial Services Authority.

Find out more about the Euro High Income Fund