For immediate release: Thursday 2 July 1998

INVESTMENT FUNDS REJECT 'WHICH?' CRITICISMS

The Association of Unit Trusts and Investment Funds (AUTIF) today rejected criticisms of unit trusts, OEICs and PEPs by ‘Which?’ magazine.

Philip Warland, Director General of AUTIF commented,

"The ‘Which?’ report is untrue, naive and misleading. In particular:

• independent research shows that small investors simply cannot access a diversified portfolio of securities at lower cost than an investment fund
  
• to say that institutional investors get a better deal and therefore small savers get a bad deal betrays economic illiteracy. The costs of management and administration are far higher for small savers as are the regulatory requirements and costs. Small savers get a very good deal for the size of transaction, indeed the companies often lose money at this end of the market
  
• UK unit trust charges are average to low compared with other countries
  
• to say that three out of four managers of UK PEPs have underperformed the stock market ignores:

   

  1. the comparison includes bond funds and funds from non-UK markets
     
  2. a lower risk product may have been chosen or advised as more suitable
     
  3. over the past 10 years the worst UK unit trust has, after charges, produced returns well above those of a building society account. The best has increased the initial investment fourfold."

He added:

"To headline the comments as a ‘City scandal’ may be an effective, if cheap, PR stunt but is of no help to savers who need serious, well-based advice."

For further comment please contact:

Philip Warland, Director General, AUTIF, 0171 831 0898
Susie Poote, Communications Assistant, AUTIF, 0171 831 0898