The next few weeks will see millions invested as people rush to take advantage of their last PEP allowance before they disappear on April 5. There are a host of special offers, including one company that will even give a voucher up to £250 if you then take out an ISA with the same company before the end of October!

So having decided you want a PEP, which one should you choose? After all, there are more than 500, including corporate bonds, 'tracker' funds, blue chip, European, smaller companies, the list goes on.

First, decide which type of fund you want to invest your money in. This will largely depend on whether you want income or growth, and how much risk you want to take. If you want a steady income you could look at a corporate bond PEP. For something more adventurous with the potential for a rising income, then an equity-based income fund might be the one to go for. Those looking for growth need to choose between a passive fund, such as some of the funds linked to the stock market indices, or one where the fund managers use their skill and experience to pick those shares that should perform well.

Having decided, you need to choose which company to use. There are a number of factors to consider. The first of these is the structure of the company concerned. This is especially important if you are investing in equities where the fund managers buy stocks in other countries. How do they know which are the best shares? This comes down to their expertise, but relies heavily on information gathering by a research team. Large investment management organisations have massive resources and maintain experts worldwide - smaller companies don't have this manpower.

The second is to consider how well they performed in previous years. While this doesn't necessarily mean they will continue the same way, it gives some indication as to whether they have been a leading player. If you are investing in shares via a unit or investment trust, you must look at leaving your money there for years, and when you look at past performance it is useful to see how they have done over say a five-year period or longer, as many companies have short-term highs and lows depending on their investment strategy.

l A free past performance table of leading UK PEP funds can be had by ringing 01484 860123.

Alan Mills is an independent financial adviser with A. J. Mills Independent Financial Advisers, a member of DBS Financial Management PLC, which is regulated by the Personal Investment Authority. Not all contracts of PHI are regulated by the PIA. Answers given are for general guidance only and specific advice should be taken before acting on any of the suggestions made. All information is based on our understanding of current tax practices which are subject to change. The value of shares and investments can go down as well as up.

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