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Embargoed: 09:00am:   Thursday 27 May 1999

PEP GRAND FINALE PUSHES FUNDS OVER £200 BILLION

• Total funds under management for the unit trust and investment funds industry, including Personal Equity Plans (PEPs) and Individual Savings Accounts (ISAs), stood at £209.5 billion at the end of April 1999, an increase of 5% on the previous month.

• Gross sales of ISAs (unit trust and oeic plans only) reached £556 million in their first month.

• Combined PEP and ISA sales for April finished 16% down on last year’s PEP only sales.

• 68% of ISA sales conducted via tied sales forces.

After PEPs had delivered such stunning end of tax year figures, it was only to be expected that ISAs would find them a hard act to follow. Anecdotal evidence had suggested that many new ISA buyers were opting for the Cash version, in preference to equity ISAs. But although the first month’s figures for the industry are far from spectacular, it is too soon to draw too many conclusions. The industry now manages some 670,000 ISA accounts, the vast majority of which, (88%), are maxi ISAs.

The investment sectors most favoured by early ISA investors largely followed the same pattern mapped out by PEP investors i.e. UK Growth and Income and UK Growth, were the first ports of call. But perhaps a little surprisingly, recent enthusiasm for the UK Fixed Interest sector, in which the majority of the corporate bond PEP funds find themselves, was not sustained to anything like the same degree.

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

"It’s going to take time before the word ‘ISA’ seeps into household vocabulary. With any new product, some people will inevitably prefer to hold back and see how things go before committing themselves. Certainly, ISA sales for April indicate that both ‘direct’ customers and ‘advisory’ clients fall into this camp.

Almost 70% of ISA sales came through company sales forces in April. This compares with an average sales figure nearer 30% when PEPs were on sale."

"However tempting, it is far too soon to read too much into these first snapshots of a new savings industry. Just like PEPs before them, ISAs can succeed, but they will only achieve the Government’s objectives if they are made simpler, and sooner rather than later.

Summary table:  April Unit Trust and PEP sales

For further information please contact:

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 April

Net Retail Sales
UK Growth, Other UK Fixed Interest

Net Institutional Sales
Global Emerging Markets, Far East Excluding Japan

Worst selling funds in April

Net Retail Sales
UK Equity Income, Investment Trust Units

Net Institutional Sales
UK Gilt, Europe

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 - April 1999

3. Retail gross - April 1999

4. Retail repurchases - April 1999

5. Retail net sales -April 1999

6. Institutional business - gross, repurchases and net sales - April 1999

ISAs:
The ISA tables relate to accounts operated by unit trust managers only and not to accounts operated by all ISA managers.

7. ISA sales and repurchases – April 1999

8. ISA gross sales – April 1999

9. ISA repurchases – April 1999

10. ISA net sales – April 1999
    

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