For immediate release: Monday 19th April 1999

REGULAR SAVINGS PLANS: The winning way to build up capital over the long term

The 1999 Quarter 1 Chartpack shows the consistent benefit of long term equity investment, for both income and growth. This is particularly apparent with regular saving investment. For example, monthly contributions of £50 into an average UK Growth Fund outstripped similar deposit account investments by 36% after just 5 years. (1999 Quarter 1 figures in bold, 1998 Quarter 4 figures in brackets).

• Over ten 10 years to 1 April 1999, the annual income on £1,000 invested in an average UK Equity Income unit trust rose to £58 (£66) after 10 years. The income from a Corporate Bond fund averaged £55 (£55); while the savings income on an average building society deposit account dropped to £32 (£34) in the tenth year from £90 in 1990. [Chart 1]
  
  
• The capital invested in an average Corporate Bond fund in March 1989 had grown by 24% (29%) over the 10 years, compared to 88% (101%) in an average UK Equity Income fund. [Chart 2]
  
  
• A lump sum of £1,000 invested in an average building society deposit account in March 1989 added £601 (£622) to its value, whilst the investment in an average Corporate Bond fund more than doubled to £2,134 (£2,232). However, the equity fund grew by 180% (200%) to £2,798 or £3,137 in a PEP (£2,999 or £3,368 in a PEP). [Charts 3/5]
  
  
• Over the ten year period to April 1999 average returns from UK Equity Income funds were similar to those achieved by UK Growth and International Growth funds. After 10 years, £1,000 invested in the UK Equity Income sector had become £2,798, compared to £2,840 in the International Growth sector and £2,778 in the UK Growth sector. [Chart 4]
  
  
• On regular savings of £50 a month, an equity investment in a UK Growth fund outstripped the savings account deposit after 5 years by £1,149 (£864). The difference increased to £4,836 (£4,005) over 10 years and £12,792 (£11,322) after 15 years. [Chart 6]
  
  
• A £1,000 investment in a UK Equity and Bond fund was only 9% (8%) higher than an equivalent Managed Life Fund investment after 5 years but 42% (29%) higher than the average building society deposit account for the same period. The difference on a £50 regular savings plan over 5 years was 6.5% (7%) on the Managed Life Fund and 27% (22%) on a deposit. [Charts 7/8] 
  
  
• After 15 years, the lump sum investment ran 189% (198%) ahead of the deposit account and 62% (73%) ahead of the Managed Life Fund; while the regular savings unit trust/OEIC plan ended 92% (87%) higher than the deposit and 30% (33%) higher than the managed life fund. [Charts 7/8]
  
  
• After 10 years, £1,000 in an average UK Equity and Bond Income Fund beat the Retail Price Index by 103% (110%) or 111% (119%) in a PEP. The deposit was 9% (9%) ahead of the Retail Prices Index. [Chart 9]
  
  
• £1,000 invested in an average fund in the following sectors over ten years, would have achieved returns of more than £3,000 - UK Equity & Bond, Europe and North America.
  
  
• A £50 per month regular savings plan over ten years, would have achieved returns of more than £12,000 in the average funds of the following sectors – UK Equity & Bond, Europe, North America, UK Growth and UK Growth & Income. [Chart 10]

For further information please contact:

Michael Quach, Head of Statistics, AUTIF: 0171 831 0898
Clare Arber, PR Manager, AUTIF: 0171 831 0898
Susie Poote, Communications Assistant, AUTIF: 0171 831 0898

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