Investing in equities comes with many advantages. However, a portfolio made up of one or just a few individual shares leaves you with all your eggs in one basket. It also leaves your investment exposed to a greater degree of risk than a more diversified portfolio containing several different asset classes.
In addition, it can be expensive to buy and sell individual shares and you don’t benefit from the extensive research capabilities available when investing with a specialist investment manager such as M&G.
How the scheme works
The M&G Share Exchange Scheme offers you an easy way to turn your individual shares or gilts (bonds issued by the UK government), listed on the London Stock Exchange, into an investment in an M&G fund. This allows you to enjoy all the advantages of a managed fund and the peace of mind of having a professional fund manager looking after your money for you.
Investing in a managed fund enables you to spread your investment risk across:
- different companies or asset classes
- different sectors
- different regions and countries
M&G will arrange for your shares to be sold through a stockbroker - The Share Centre Limited. Their commission is paid by you and will be deducted from your proceeds before reinvestment. The shares are normally sold in the afternoon of the day on which we receive your share certificate(s).
Net proceeds are reinvested in your chosen M&G fund(s) on the day the settlement is received (usually three days after the sale). This means that your investment will be out of the market until we receive settlement for your sale. CREST Transfer Form(s) will be required for this transaction. A separate CREST Transfer Form needs to be filled out for each share you are selling.
We arrange the sale of enough shares to raise your requested investment amount or any outstanding investment allowance, whichever is lower.
Any small amounts of money raised by the sale but not reinvested for you will be returned to you.
For example, if you want to invest £15,240 in an ISA and the sale proceeds are slightly more than that, we’ll give you back any shares we do not need to sell in the form of balance certificates.
The proceeds of the shares, minus any commission payable to The Share Centre Limited, are passed on to M&G with your investment application form(s).
The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested.
Please note, your current provider may apply a charge when you transfer your investment. Whilst your investment is being transferred it will be out of the market for a short period of time and will not lose or gain in value.
We are unable to give financial advice. If you are unsure about the suitability of your investment, speak to your financial adviser.
The first step is to download and complete the following forms:
You’ll need to fill out a separate CREST transfer form for each share you are selling.
We’ll also need:
- a cover letter
- individual share certificates
- current passport or driving licence
- bank statement or utility bill
The documents must be originals (which we will return), or copies which have been certified by a financial adviser, bank or solicitor. We reserve the right to request additional documents if necessary. Contact Customer Relations on 0800 390 390 for more information.
Next, send everything to us at:
M&G Share Exchange
The money raised from the sale of shares is used to purchase shares or units in an M&G Investment Fund, inside and/or outside an ISA wrapper.
Once we’ve exchanged your shares and reinvested the proceeds, you’ll be sent:
- a covering letter confirming the transaction
- broker’s contract note(s) for the shares sold on your behalf
- documents confirming your reinvestment, once completed
The money is now used to purchase shares/units in an M&G fund or funds, either inside or outside an ISA wrapper, according to your instructions.
When the purchase is complete, we will send you:
- a formal acknowledgement of your investment
- our Welcome Brochure, which will explain everything you need to know about investing with M&G
If you choose to invest only a part of the proceeds from the sale of your shares with M&G, or you are investing in an M&G ISA and the proceeds generated from the sale of your shares exceeded your ISA limit (£15,240 in the tax year ending 5 April 2017), we will also send you a cheque for the excess funds from the sale of your shares, or your balance certificates.
The following charges are applied to each individual stock sold, rather than the total value of all stocks sold.
- 1.0% commission on the first £5,000 of the transaction value of each stock
- 0.5% commission on the next £5,000 of transaction value of each stock
- 0.25% commission on the remainder of each stock
- there is a minimum charge of £7.50 per stock sold
Any additional expenses that may be incurred when delivering the securities or registering them will also be paid by you. For example, a Stock Exchange Panel of Takeovers and Mergers (PTM) levy of £1 is payable on any transaction in excess of £10,000. The buyer of the securities will pay any stamp duty.
Capital Gains Tax (CGT)
Exchanging shares for reinvestment in an M&G ISA or investment fund counts as a disposal for CGT purposes. Your liability will depend on your personal circumstances. If you think you may have a tax liability, you should speak to a financial adviser.
The M&G High Income Investment Trust is only available for investment through our Share Exchange Scheme via The M&G ISA.
Any small amount of sales proceeds above your outstanding ISA limit for this tax year will be refunded to you. We’ll give you balance certificates for any remaining unsold shares.
The M&G Share Exchange Scheme is only available for shares and gilts listed on the London Stock Exchange. We reserve the right to refuse to sell any holding where we consider there could be problems in arranging sale or delivery. Please therefore ensure that all certificates contain up-to-date details.
You should also be aware that there is a minimum commission fee for selling shares on the market. If the potential value of the sale falls below that minimum, we won’t be able to arrange the sale of those shares.
Rights issues and dividends
When your shares have been sold, there can be a delay before the share register reflects the change in share ownership. This means you might receive a dividend or rights issue that is due to the purchaser of your shares. Unless you’ve sold the shares exclusive of dividend or rights issues, you might receive a claim for payment that you are required to settle.