Back to 1998 Press Release menu
Back to UK Business (monthly)

Information: For immediate release Monday 26 January 1998

Record £7 billion Unit Trusts and PEPs sold to private investors

• Funds under management end year at £158 billion
• Record net retail unit trust sales for 1997 of £7.4 billion, up 18% on last year; net unit trust PEP sales £7.1 billion for 1997, also a record and up 26% on 1996
• 1997 regular savings PEP plan total sales £966 million, up 70% on 1996 total
• December net retail sales of £394 million, net PEP sales £279 million compared to £413 million and £402 million respectively last month
• Unitholder accounts end 1997 approaching 10 million

December net sales of unit trusts pushed the 1997 total comfortably beyond the £7 billion mark and into record heights, to £7.4 billion. The 1996 total, which was the previous record, stands 18% lower at £6.3 billion. The 1997 PEP sales told much of the story, contributing in total a net £7.1 billion.

Sales of regular savings over the year more than kept up with the increasing pace of the unit trust market as a whole, and accounted for 7% of the gross retail total this year compared to 5% last year. The level of monthly plan sales rose an average of 11% each quarter, reaching a gross total of £1.1 billion by the end of December.

1997 was the year of the index fund and of UK Growth funds in general. The UK Growth sector was the most popular sector overall in 1997 among both retail and institutional investors, with private investors adding a record £2 billion (28% of the net retail total), and institutions a further £333 million. Company salesforces were consistently strong sellers of UK Growth funds, making up over half of the £2 billion net total. Independent intermediaries also showed a strong preference for UK Growth funds, but their 1997 sales of bond funds as well as Europe funds were not far behind. Overall PEP sales for the year very much followed a similar pattern in terms of both sector and distribution preferences.

Net retail sales of index funds rose to £1 billion in 1997, compared to £355 million in 1996. Direct buyers were responsible for the shift, accounting for 71% of the total, while leaving independent intermediaries and company salesforces trailing with only 11% and 15% respectively.

Corporate Bond PEPs were also enormously popular in 1997, pushing sales of Other UK Fixed Interest funds to the retail number 2 spot for the year. However, the net Corporate Bond PEP 1997 total of £1.3 billion, over half of which was sold through company salesforces, fell just short of last year’s record of £1.4 billion.

At the other end of the scale, 1997 saw private investors shun Far Eastern funds, making them the least popular retail funds of the year and causing a net £406 million net outflow of private money from the 3 Far Eastern sectors by the end of December. Institutional investors focused their disfavour in 1997 on the Far East Excluding Japan sector, with a £820 million total net outflow from the sector. Outflows continued in December, although at a slower pace than in previous months.

For the month of December, net retail sales of unit trusts reached £394 million, 6% ahead of the same month last year but down from November’s £435 million. Net PEP sales also dropped back, falling to £279 million from £402 million, the lowest level for the year. The fall was due equally to a 20% reduction in gross sales, and a 20% increase in the level of repurchases. Institutional sales in December bounced back from last month’s net outflow to reach £120 million, mainly due to strong sales of UK Growth and Income funds as well as Europe and North American funds.

Philip Warland, Director General of the Association of Unit Trusts and Investment Funds (AUTIF), commented,

"The growth of PEP sales by banks, building societies and life companies explains our market research which shows that 53% of PEP holders have saved for between only one and three years, and that penetration of lower income groups is rising sharply. The fact is that the PEP has begun to build a savings culture throughout the population and we must ensure the ISA reinforces this trend and does nothing to obstruct it."

Regular Savings Plans: 1997 Full year data Plan Holders:

Sales: £mn

Summary table: December Unit Trust and PEP sales

For further information please contact:

Philip Warland, Director General, AUTIF,  0171 831 0898
Anne McMeehan, Director of Communications, AUTIF,  0171 831 0898
Emma Weiss, PR Manager,  AUTIF,  0171 831 0898
Brian Harvey, Head of Statistics, AUTIF,  0171 831 0898

Notes to Editors: Also released, quarterly average performance charts showing:

• £2,956 return on £1,000 invested over 10yrs compared to £1,669 on deposit
• £11,726 return on £1,000 over 15yrs compared to £4,329 in a managed life fund

Best selling funds in December
Net Retail Sales
Other UK Fixed Interest, UK Growth            

Net Institutional Sales
UK Growth & Income, Europe

Worst selling funds in December
Net Retail Sales
Japan, Far East Ex.Japan, Far East Inc.Japan   

Net Institutional Sales
Japan,UK Smaller Companies

PEPs:
The tables detailing stocks and flows via PEPs relate to plans operated by unit trust managers only and not to plans operated by all PEP Plan Managers.

1. Summary of total unit trust and PEP sales - 1990 to 1997
2. Sector summary - December 1997
3. Retail gross - December 1997
4. Retail repurchases - December 1997
5. Retail net sales - December 1997
6. Institutional business - gross, repurchases and net sales - December 1997

Back to 1998 Press Release menu
Back to UK Business (monthly)