For immediate release Friday 14 August 1998

10 YEAR SAVINGS AND INVESTMENTS RETURNS IN PERSPECTIVE

• The UK stock market has slipped by 12% since reaching its high on 20 July 1998. And since the end of the second quarter, the period for which these figures are compiled, it has fallen back some 7%. The actual effect of these falls on long term savers and investors is shown alongside this quarter’s industry chart pack.
  
  
• Over ten years to 1.7.98, the annual income from £1,000 invested in an average fund in the UK Equity Income unit trust sector rose 49% to £64; the income from an average Corporate Bond fund remained above the £50 mark and the interest from a savings account tumbled 57% from £75 to £32.
  
  
• Capital invested in July 1988 in an average UK Equity Income fund would have doubled over the 10 years - £2,001. And the effect of market volatility over the last few weeks would have been to shaved this back to £1,910 i.e. a fall of 4.5% (figures as at 11 August)
  
  
• In terms of total return over the 10 year period, £1,000 in the average UK Equity Income unit trust would have grown by 200%, the average Corporate Bond Fund 105% and the savings account 65%. (International Equity Growth funds present a similar picture – see chart). Extending the figures to 11 August, the respective growth levels are 188%, 108% and 66%.
  
  
• Over 20 years to 1 July 1998, £1,000 in an UK Equity Fund would have grown to a value of £19,647, some £15,968 ahead of a building society deposit account. If it had been possible for the investment to have been held tax free, the gap widens still further with the returns from the unit trust growing to £27,443, whilst the building society produces £5,474.
  
  
• £50 per month invested for 10 years in a PEP would have produced £12,649, 63% ahead of the building society gross interest account which standing at £7,778.
  
  
• A lump sum invested in an UK Equity and Bond Fund over 15 years ended + 585%, whilst the equivalent return in the managed life fund was + 321%. For regular savers investing £50 per month the variance was less marked but still impressive - £26,164 and £19,346 respectively.
  
  
• £1,000 in a UK Equity and Bond Income Fund at the end of 10 years had doubled in terms of out-performance of the Retail Price Index - £3,115 as compared to £1,534.

For further comment please contact:

Anne McMeehan, Director of Communications, AUTIF, 0171 831 0898
Michael Quach, Head of Statistics, AUTIF, 0171 831 0898