I think the UK investor is going to be surprised at just how far rates are going to fall."We like bonds but are also looking at the high-yielding UK equities with strong dividend cover, such as the utilities, which are less affected by the global economy."Mr O'Shea says most private investors do not have the flexibility to switch investments around: "You cannot tell somebody with a PEP that they should sell and move into cash, and try to get back into the market later. Gilts are issued by the government to raise money and pay fixed interest over a set term. Corporate bonds are similar in principle but issued by private companies and therefore more risky. Both are considered attractive because interest rates look set to fall as governments act to kickstart the global economy.Mike O'Shea, joint managing director at Premier Asset Management, says: "We are looking at fixed-interest investments generally.

"We are not seeing people leaving index funds but nor are we seeing much money coming in," says Mr McNaught. "Index funds still represent excellent value because of their low charges, although actively managed funds are attracting more interest at the moment."He suggests that investors wary of market turbulence look at three areas: gilts and bonds; fixed-interest investments; and cash. Lewis McNaught, director and head of retail at Gartmore Investment Management, says: "It is not a time for the fainthearted and we have probably not yet reached the point where people can pile in and buy up underpriced equities." He adds: "Investors are not panicking. We have been preaching the gospel of long-term investing and taking at least a five-year view; hopefully this message has hit home."Mr McNaught says there is still scope for equity investment in selected areas in the US and Europe, but less so in the UK and emerging markets.Many experts have suggested that index-tracking funds would suffer in a slump because they can only follow the market down, but this doesn't seem to have happened yet.

WITH a global recession possibly heading our way, where should we put our money? Equities have been attracting record numbers of investors in recent years and, unless you desperately need the cash, you should leave any money invested in shares to ride out the storm But for new investors the answer is not so simple. But be prepared for a more volatile ride than you will usually get with unit trusts.recommended fundsUNIT TRUSTS AND OEICSBarclays Funds 0181-522 4000Fidelity Investment Services 0800 414 161Gartmore Fund Managers 0171-782 2000HSBC Unit trust Management 0800 181 890Invesco Fund Managers 0171-626 3434M&G Securities 01245 390 390Mercury Fund Managers 0800 445 522Perpetual Unit Trust Management 01491 417 000Save & Prosper Group 0800 829 100Schroder Unit Trust Managers 0800 526 535Standard Life 0800 333 353Threadneedle Investments 0800 068 3000INVESTMENT TRUSTSMercury European Privatisation 0171-280 2800TR City of London 0171-638 5757Witan 071-638 5757Foreign & Colonial 0171-628 8000Alliance 01382 201700Kleinwort Charter 0171-956 6600Gartmore European 0171-782 2749Henderson Strata 0171-638 5757. While they are having a sticky time at the moment, they can offer great returns."One of the (risky) benefits of an investment trust is that it can borrow money if the manager thinks that is a good time to buy shares This is known as gearing. Money is borrowed at low interest rates in the hope of far greater capital gains. "Investors should not worry about today's discounts and gearing," says Mr Kohn. "Look at the better funds with good managers."Investment trusts have no initial charge, just the usual 0.5 stamp duty that everyone pays when buying shares.

Annual charges are also low, usually well under 0.5 per cent - much less than other types of collective fund.The investment trust trade body, the AITC (0171-431 5222), publishes a number of fact sheets to help you choose. If one of the sub-funds in an Oeic suffers a serious problem, it can seep into the others to their cost."Investment trustsThese are companies in their own right but you can invest in exactly the same way, buying shares every month or using a lump sum.Mr Kohn says: "They are not for widows and orphans, and you need to do your research properly. However, there are disadvantages, and unit trusts will also be offering a single price from next year. "A single-price unit trust is for those who don't want an umbrella fund," says independent adviser Roddy Kohn "It avoids contagion. The main plus is that they have the same price for their units, whether you are buying into the fund or selling up. Unit trusts have two prices: an offer or buying price, and a bid or selling price.An Oeic gives investors more flexibility to hold several funds in an "umbrella" portfolio. Saving pounds 50 a month is a good idea because if you invest on a regular basis, over the long term, the average price you pay for units should be less than the price paid when you sell.OeicsOpen-ended investment companies were only introduced last year but a few leading groups have already changed their unit trusts into Oeics.

Ian Millward, of independent adviser Chase de Vere, says: "Spread your money around. In the present market, I would be looking at balanced funds with a spread of equities and fixed-interest stock. Look at the larger groups that have a broad range of funds available."You can invest through lump- sum or regular savings, using a PEP. When your allowance is used up, you can still put money in but the investment is taxable.Don't worry if you don't have several thousand to stick into a fund. SINCE mid-July, when the stock market reached its peak, share prices have fallen by more than 20 per cent in the UK and US.