For Immediate Release: Monday 14 February 2000
UK EQUITY INCOME FUNDS
The Next Step in Stockmarket Investment After Corporate
Bond Funds
Investors looking to increase their exposure to the stockmarket
could well consider UK Equity Income Funds as an alternative
or supplement to their corporate bond fund holdings. UK Equity
Income funds provide a "growing" rather than "immediate" income
and although capital growth is not the only priority, over
the past ten years these funds have produced strong levels
of capital return as well as an income stream. Fund managers
look to achieve these results by investing in companies which
they believe will be able to pay steady or increasing dividends
over time.
- Over 10 years to 1 January 2000, the annual income on
£1,000 invested in an average UK Equity Income unit trust
increased to £58 after 10 years. The income from a Corporate
Bond fund averaged out at £56; while the savings income
on an average building society deposit account dropped to
£22 in the tenth year, falling from £98 in 1990. [Chart
1]
- The capital invested in an average Corporate Bond fund
in December 1989 had grown by 23% over the 10 years, compared
to 91% in an average UK Equity Income fund. [Chart 2]
- A lump sum of £1,000 invested in an average building society
deposit account in December 1989 added £528 to its value
over 10 years, whilst the investment in an average Corporate
Bond fund more than doubled to £2,107. The equity income
fund grew by 179% to £2,792 or £3,096 in an equivalent PEP/ISA.
[Charts 3/5]
- Over the ten year period to December 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
£2,792, compared to £2,738 in the Global Growth sector and
£3,136 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 £1,421. The difference increased
to £6,188 over 10 years and £14,484 after 15 years. [Chart
6]
- A £1,000 investment in a UK Equity Income fund was 7%
higher than an equivalent Managed Life Fund investment after
5 years but 71% higher than the average building society
deposit account for the same period. The difference on a
£50 regular savings plan over 5 years was 1% less than the
Managed Life Fund and 27% up on a deposit. [Charts 7/8]
- After 15 years, a £1,000 lump sum investment in a UK Equity
Income Fund ran 241% ahead of the deposit account and 70%
ahead of the Managed Life Fund; while the £50 regular savings
unit trust/OEIC plan ended 96% higher than the deposit and
20% 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 66% or 87% in a PEP/ISA.
The deposit account was 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 – Europe excluding UK, Europe including UK, European
Specialist, Global Equity Income, Global Specialist, North
America, North America Specialist, UK All Companies, UK
Smaller Companies and UK Specialist.
- A £50 per month regular savings plan over ten years, would
have achieved returns of more than £15,000 in the average
funds of the following sectors – Europe ex UK, Europe inc
UK, European Specialist, North America, North America Specialist
and UK Smaller Companies. [Chart 10]
For further information please contact:
Anne McMeehan, Director of Communications,
AUTIF - +44 (0)20 7831 0898
Clare Arber, PR Manager, AUTIF - +44 (0)20 7831 0898
Attachment 1 - Charts
1 to 9 (in PDF Format)
Attachment 2 - Chart
10 (in PDF Format)
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