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Information: Embargoed: Noon Tuesday 26 May 1998

April unit trust sales reach all time high of £5.3 billion

• April net unit trust PEP sales of £ 1.7 billion set a new record

• Total net retail sales 4% up on April 1997

• 20 companies account for 84% of net retail sales

• Total funds under management stand at £183 billion

Earlier predictions of a business boom in April were confirmed. Total gross sales for the industry burst through the previous record monthly high of £4.3 billion achieved in March to reach £5.3 billion for the month. The main driving force was the influx of new unit trust PEP money, almost £2 billion for the month, of which £728 million arrived in the first 5 days. Direct sales from the public accounted for 29% of the total and IFA sales 32%, with sales forces making up 38% of the gross PEP inflow.

Also noteworthy is the all time high of £1.1 billion total net institutional sales, aided by the significant inflow of funds from overseas of one company *.

As in March, the two main sectors to attract retail business were the UK Growth and the UK Growth & Income areas, whilst Japan and the Far East excluding Japan continued to suffer from poor market sentiment, as did the emerging markets sector. The two main UK sectors combined make up almost 30% of the industry’s gross sales, but it was Europe as an individual sector, that came top overall in gross sales terms, accounting for 15% of new business.

The North American sector, for so long a star performer, but consistently undernourished by sales, came 6^th in overall gross sales terms, but this was primarily boosted by unitised insurance business. Direct investors were clearly much less enamoured, relegating it to 14^th position, making up less than 1% of gross sales through this channel.

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

"What is clear is that retail investors remain convinced of the potential long term benefits to be obtained by saving and investing in unit trusts and open ended investment companies. The tax efficiency of PEPs is without doubt a great motivator and for the rest of this tax year, provided markets continue to hold up, there is every reason to believe that the industry will enjoy a business bonanza as investors look to take advantage of their PEP allowance.

The challenge the industry now faces is its preparation for the introduction of Individual Savings Accounts next April. It must continue to provide an attractive service to those who have already found PEPs compelling and at the same time seek to deliver to potentially an even larger audience the merits of ISAs.

Markets go down as well as up. Newer investors are likely to be more cautious than their more experienced counterparts. It is therefore for the industry, regulators and Government to ensure that investment expectations are realistic. The public has a right to quality products that represent good value over time. Reasonable cost and ease of access are important elements, but the issues of risk and suitability must not be bypassed in efforts to bring the advantages of saving to the greatest possible proportion of the population. If they are not properly addressed a ‘benchmarked’ ISA could end up administering the ‘nasty surprise’ of a market fall to an inexperienced saver.

This might put people off not just ISA’s, but equity investment in any form, which is so vital for future pension provision."

Summary table: April Unit Trust and PEP sales

For further comment please contact:

Anne McMeehan, Director of Communications  AUTIF  0171 831 0898
Susie Poote, Communications Assistant  AUTIF  0171 831 0898

Notes to Editors:

Best selling funds in April
Net Retail Sales                                                 Net Institutional Sales
UK Growth, UK Growth & Income                    International Growth, Europe

Worst selling funds in April
Net Retail Sales                                     Net Institutional Sales
Japan, Far East Excl Japan                     Far East Excl Japan, UK Smaller Co

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 1998

2. Sector summary - April 1998

3. Retail gross - April 1998

4. Retail repurchases - April 1998

5. Retail net sales -April 1998

6. Institutional business - gross, repurchases and net sales - April 1998

 * £702 million of assets was transferred in April from Threadneedle Global Assets in Luxembourg to Threadneedle Investment Funds, the Group’s UK open-ended investment company.

Charts

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