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Embargoed: 12:00pm: Monday/22/February/1999

Final Quarter PEP Sales off to a Flying Start

• Total gross PEP sales for January up 37% on January 1998

• Gross retail sales up 53% on January last year

• Unit trust and investment fund PEP funds under management a shade under £50 billion

• Possible indication of PEP account consolidations

With the end of new PEP business for the industry looming, net PEP sales for January reveal a 14% increase over the same period last year (£302.9 for January 1999, compared with £266.5 for January 1998). Yet gross sales show a significant increase of 37%, suggesting that investors and their advisers are becoming markedly more active in organising their affairs before the end of this tax year.

For the first time since AUTIF has been collecting investment fund PEP data there has been a decline, albeit small, in the number of PEP accounts (8.9 million, compared to 9.07 million for December). This is in part explained by two companies experiencing some difficulty in delivering accurate statistical data, however, in spite of this there does appear to be a general decline in the rate of growth of new accounts. This implies that new business is increasingly from existing rather than new investors. There is also a possible indication of moves to consolidate PEP investments, although it will be important to see whether this shift develops over the next two months.

The Other Fixed Interest sector has been the favourite for gross PEP sales, but the two main equity sectors, UK Growth and UK Growth & Income, also maintain their strong appeal.

The balance of distribution for PEP sales in January is also noteworthy. In gross sales of PEPs, the ‘Direct’ channel accounts for 23% of business (20% for January 1998), ‘Intermediary’ 33% (27%), ‘Sales Force and Tied Agent’ 42% (50%) and ‘Private Client’ 2% (3%). It is in comparing these figures with net PEP sales that an interesting shift arises. Direct net PEP sales were slightly negative at just over -£2 million (+£21 million in 1998), ‘Intermediary’ 40% (24%), ‘Sales Force and Tied Agent’ 56% (66%) and ‘Private Client’ 3% (2%).

Anne McMeehan, Director of Communications at the Association of Unit Trusts and Investment Funds (AUTIF), commented:

"It is scarcely surprising that people are buying more and more bond funds. With interest rates on deposit accounts so low, the search for income is pressing."

She continued:

"What is more interesting from a business perspective is the anecdotal evidence suggesting that the battle for market share is "hotting up". Competition for clients is fierce and growing in intensity. More likely than not, this is good news for consumers as management companies vie with one another for public attention, focussing on the strength of their ‘brand’, lower costs, better service and more consistent, superior returns."

Summary table: January 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
Clare Arber: PR Manager, AUTIF, 0171 831 0898
Michael Quach: Head of Statistics, AUTIF, 0171 831 0898

Notes to Editors:

Best selling funds in January

Net Retail Sales
Other UK Fixed Interest, UK Growth

Net Institutional Sales
Far East Excl Japan, Other UK Fixed Interest

Worst selling funds in January

Net Retail Sales
Japan, International Growth

Net Institutional Sales
Europe, International Growth

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 – 1992 to 1999

2. Sector summary – January 1999

3. Retail gross – January 1999

4. Retail repurchases – January 1999

5. Retail net sales – January 1999

6. Institutional business – gross, repurchases and net sales – January 1999

7. PEP sales, repurchases and net sales January 1998 & 1999

Charts

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