Information: For immediate release Monday 11 October 1999
HAVING YOUR CAKE AND EATING IT IN TEN YEARS £10,000 HAS
GROWN TO £17,910 - AT THE SAME TIME PRODUCING AN ADDITIONAL
TOTAL INCOME OF £4,800
With the fall in interest rates over recent years, investors
have seen their income severely dented. Yet it has been possible
to have a sustainable income and a degree of capital protection
over the long term by investing in unit trusts and OEICs.
There are risks but over time these diminish and the rewards
can be substantial, as the figures clearly show.
AUTIF’s latest quarterly performance charts show that an
investor who placed £10,000 in the average UK equity income
fund ten years ago, would have received a total of £4,800
in income over the ten year period. In addition, they would
have also seen their savings grow to £17,910 by the end of
the period. The income from a deposit account over the same
period would have provided £4,530 in total, but the original
investment would have remained the same. Corporate bond funds
would have yielded the highest total income at £5,670 after
ten years, this time with the original investment having increased
to £12,550.1999 Quarter 3 figures in bold, 1999 Quarter 2
figures in brackets.
- Over 10 years to 1 October 1999, the annual income on
£1,000 invested in an average UK Equity Income unit trust
increased to £57 (£62) after 10 years. The income from a
Corporate Bond fund averaged out at £54 (£58); while the
savings income on an average building society deposit account
dropped to £26 (£30) in the tenth year, falling from £97
(£94) in 1990. [Chart 1]
- The capital invested in an average Corporate Bond fund
in September 1989 had grown by 26% (30%) over the 10 years,
compared to 80% (97%) in an average UK Equity Income fund.
[Chart 2]
- A lump sum of £1,000 invested in an average building society
deposit account in September 1989 added £554 (£579) to its
value over 10 years, whilst the investment in an average
Corporate Bond fund more than doubled to £2,122 (£2,211).
The equity income fund grew by 164% (191%) to £2,639 (£2,914)
or £2,937 in an equivalent PEP/ISA (£3,251 in a PEP/ISA).
[Charts 3/5]
- Over the ten year period to October 1999 average returns
from UK Equity Income funds were similar to those achieved
by UK All Companies and Global Growth funds. After 10 years,
£1,000 invested in the UK Equity Income sector had become
£2,639, compared to £2,392 in the Global Growth sector and
£2,782 in the UK All Companies sector. [Chart 4]
- On regular savings of £50 a month, an equity investment
in a UK All Companies fund outstripped the savings account
deposit after 5 years by £890 (£1,342). The difference increased
to £4,702 (£6,606) over 10 years and £13,111 (£19,797) after
15 years. [Chart 6]
- A £1,000 investment in a UK Equity Income fund was 18%
(22%) higher than an equivalent Managed Life Fund investment
after 5 years but 60% (73%) 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% (10%)
on the Managed Life Fund and 22% (35%) on a deposit. [Charts
7/8]
- After 15 years, the lump sum investment ran 259% (305%)
ahead of the deposit account and 98% (105%) ahead of the
Managed Life Fund; while the regular savings unit trust/OEIC
plan ended 94% (113%) higher than the deposit and 34% (40%)
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 56% (69%) or 75% (91%) in
a PEP/ISA. The deposit was 9% (10%) 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 ex UK, Europe inc UK,
Global Specialist, North America and North America Specialist.
- 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
ex UK, Europe inc UK, North America, North America Specialist.
[Chart 10]
For further information please contact:
Anne McMeehan, Director of Communications,
AUTIF - 0171 831 0898
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
Please click to view
the attached PDF file
Attachment 1 - Charts 1 to 9
Please click to view
the attached PDF file
Attachment 2 - Chart 10
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