Information: For immediate release Tuesday 9 February 1999

UNIT TRUST INVESTORS PREPARE FOR THE LONG TERM: RETENTION RATE INCREASES TO OVER 8 YRS

The latest annual UTIS study, examining investor profile and behaviour, was unveiled today by the Association of Unit Trusts and Investment Funds (AUTIF). The research shows an investing public more balanced in the numbers of men and women and social grouping, and increasingly committed to equity investment. It shows a clear understanding that for equity investment, length of time and spreading risk are paramount, and not short-term considerations such as saving tax.

The research study, now in its 5th year, was based on a sample of 604 users of AUTIF’s Unit Trust Information Service (UTIS) from last year and selected at random. UTIS is the Association’s dedicated 24-hour information line handling the distribution of the AUTIF public information booklets. The research was conducted for AUTIF in mid November 1998.

The research found that:

• 4 out of 10 unit trust investors look to invest for over 10 years (average 8.1 years)
• Women are much more interested in investing than 4 yrs ago (32% of the sample from 23%)
• Investors buy unit trusts for their good value, to beat savings on deposit and to spread risk. Saving tax has become less important
• C2s, Ds and Es are increasingly predominant among unit trust investors
• Two thirds of unit trust holders are basic rate taxpayers
• Investors in unit trusts are saving less, but more often
• 44% of PEP holders invest the maximum allowable each year (31% of future ISA investors)
• Newspapers are still the most heavily relied upon source of information

ISAs:

• 73% of investors are either very or fairly likely to invest in ISAs
• 25-34 yr olds show the clearest understanding and enthusiasm for ISAs
• Unit trust investors will invest up to 60% of the limit in ISAs, most will use the equity part
• 3% want to buy their ISAs at the supermarket
• One quarter of investors will not invest the excess from reduced ISA limits
• One out of five investors think that a CAT standard means a guaranteed return or no risk
• Most PEPs will be left where they are rather than re-allocated or consolidated
• Two thirds of investors will seek advice from an IFA about ISAs

Philip Warland, Director General of AUTIF, said

"In ten years, saving through PEPs has reached all parts of the population. It has brought with it the concept of equity investment, combining a long-term view with an understanding that investors must not put all of their eggs in one basket. The next step is to get across a similar message on retirement planning, in which both the ISA and the new investment fund pensions vehicle will play a key part."

He continued,

"These products will be vital for securing the long term financial health of the public over the next ten years."

For further comment please contact:

Philip Warland Director General, AUTIF, 0171 831 0898
Anne McMeehan Director of Communications, AUTIF, 0171 831 0898
Clare Arber PR Manager, AUTIF, 0171 831 0898
Emma Weiss Communications Manager, AUTIF, 0171 831 0898

Notes for Editors: Please click here to see the full report