For Immediate Release: Monday 6 August 2001

STOCKMARKET INVESTING FOR THE LONG TERM 

The benefits of stockmarket investments over the longer term, compared to saving in a deposit account, are clearly illustrated in Charts 7 and 8.  The difference after five years may not appear significantly improved, particularly through a regular savings plan (£270 in the average investment fund’s favour), but over ten and fifteen years the gap widens considerably.  £1,000 invested in a UK Equity Income fund would have returned over £1,500 more than a building society account after 10 years and almost £2,800 more after 15 years.

• Over 10 years to 1 July 2001, the annual income on £1,000 invested in an average UK Equity Income fund rose to £68.  The income from a Corporate Bond fund slowed to £53; while the savings income on an average building society deposit account dropped to £23 in the tenth year, falling from £68 in 1991.   [Chart 1]

• The capital invested in an average Corporate Bond fund in June 1991 had grown by 28% over the 10 years, compared to 102% in an average UK Equity Income fund.   [Chart 2]

• A lump sum of £1,000 invested in an average building society deposit account in June 1991 added £382 to its value over 10 years, whilst the investment in an average Corporate Bond fund (including both income and capital growth) more than doubled to £2,110. The equity income fund grew by 189% to £2,888 or £3,146 in an equivalent ISA/PEP.   [Charts 3/5]

• Over the ten year period to July 2001 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 £2,888, compared to £2,620 in the Global Growth sector and £2,860 in the UK All Companies sector.   [Chart 4]

• On regular savings of £50 a month, an equity investment in a UK All Companies fund beat the savings account deposit after 5 years by £85. But the difference increased to £2,900 over 10 years and £7,739 after 15 years.   [Chart 6]

• A £1,000 investment in a UK Equity Income fund was 31% higher than an equivalent Managed Life Fund investment after 10 years, but 109% higher than the average building society deposit account for the same period.  The difference on a £50 regular savings plan over 10 years was 18% on the Managed Life Fund and 47% on a deposit.  Charts 7/8

• After 15 years, a £1,000 lump sum investment in a UK Equity Income Fund ran 138% ahead of the deposit account and 58% ahead of the Managed Life Fund; while the £50 regular savings unit trust/OEIC plan ended 71% higher than the deposit account and 27% 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 89% or 109% in an ISA/PEP.  The deposit account was 6% ahead of the Retail Prices Index.  [Chart 9]

• Over 10 years, the top three performing sectors were the North American Smaller Companies (return of £5,037 on £1,000), Technology and Telecommunications (return of £4,372 on £1,000) and North America (return of £4,162 on £1,000).   [Chart 10]

For further information please contact:

Anne McMeehan, Director of Communications, AUTIF - +44 (0)20 7831 0898
Dorian Carrell, Head of Statistics, AUTIF - +44 (0)20 7831 0898
Clare Arber, PR Manager, AUTIF - +44 (0)20 7831 0898

Attachment 1- Charts 1 - 9 (in PDF format)
Attachment 2 - Chart 10 (in PDF format)