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Embargoed: 12.00 noon: Wednesday 25 April 2001

2000/2001 INVESTMENT FUND ISAs NET SALES 13.5% DOWN ON FIRST YEAR

• Total unit trust/oeic ISA funds under management - £19 billion
• Total ISA gross sales for the tax year - £9.9 billion (£9.0 billion net)
  (£10.6 billion gross/£10.4 billion net for 6 April 1999 to 5 April 2000)
• ISA gross sales for 1 January to 31 March 2001 - £2.7 billion (£2.4 billion net)
  (£4.1 billion gross/£4 billion net for 1 January to 31 March 2000)
• ISA gross sales for 1 January to 5 April 2001 - £3.4 billion (£3.0 billion net)
  (£5.1billion gross/£5billion net for 1 January to 5 April 2000)
• ISA gross sales for March 2001 - £1.3 billion (£1.2 billion net)
  (£2.4 billion gross /£2.3 billion net for March 2000)
• ISA gross sales for the first week of April - £664 million (£633 million net)
  (£997 million gross /£962 million net for the first week of April 2000)

The traditional "end of season" rush into tax-efficient investment funds was still evident, but to a much lesser degree than in previous years. The chart below illustrates the PEP/ISA buying pattern over the last year of PEPs and the first two of ISAs.

Net sales for investment fund ISAs in March reached £1.2 billion, a rise of 83% on February’s £647 million and 130% on January’s £517 million. (However, this represented a 49% drop on the £2.3 billion invested in March 2000.) A further £633 million was invested in the first five days of April, bringing total net ISA sales for the year to £9.0 billion, 13.5% less than the £10.4 billion in 1999/2000.

Net ISA sales for the first quarter to 5 April 2001 of £3.0 billion were 60% of last year’s £4.993 billion. Last year 47% of ISA sales for the financial year took place over this period. This year the figure fell to 33%.

Over 2.6 million investment fund ISA accounts were opened in the 2000/2001tax year. This compares to over three and half million in the first year. ISA funds under management dropped to £18.8 billion in March. (Part of the decline, £300 million, is accounted for by the discovery of an ongoing reporting error by one company over the last 16 months.)

Clare Arber, PR Manager of AUTIF commented:

"Falls in stockmarket values and an uncertain outlook have deterred many would-be investors in the final quarter of the tax year. However, March and April aside, the sales pattern for the full year is not so dissimilar to previous years."

Sector changes

Investors did appear to take precautionary action as a result of the stockmarket activity in March, with noticeable increases into the less volatile, bond-based sectors. There were noticeable outflows from the Europe ex UK sector in favour of the UK Other Bond and UK Corporate Bond sectors. However, both the UK All Companies and North American sectors saw an increase in retail investment. Unsurprisingly, the Specialist sector (comprising largely technology funds) experienced a considerable drop in popularity. Sales of CAT standard funds have increased over recent months and in March accounted for 23% of ISA gross sales, double their March 2000 inflows. Almost 16% of all ISA sales in March went into tracker funds, which contributed to the increase in investment in the UK All Companies sector this month.

Distribution

IFAs lost some ground to sales forces and tied agents in the second year. Although IFAs are still responsible for the majority of all investment fund ISA sales, (41%), they accounted for over half of all first year sales. Sales forces increased their share of ISA sales to 36% from 26% last year, whilst 22% of all ISA sales were made direct (23% in 1999/2000).

Regular savings

A pattern is starting to emerge that suggests that more investors are opting to invest throughout the year. Regular saving into unit trusts and OEICs continues to increase each quarter. Of the current 2.1 million plans, over 80% are within an ISA wrapper. Record investment levels have been maintained, with over £562 million invested over the three months to end of March, of which £476 million went into investment fund ISAs.

Industry statistics

Total industry funds under management of £245 billion declined by 5%, as world stockmarkets fell by an average of 7%. Gross sales of £5.6 billion were up 50% on February, but down 27% on last March (£7.7 billion). However, repurchases were also significantly down on last year, dropping from £4.5 billion in March 2000 to £3.5 billion this year.

Clare Arber added:

"There is no doubt that over the last twelve months some investors will have had their first experience of falling markets. The wise ones will have taken it in their stride, remembering that when they invested they were committing to a medium to long term investment. Sadly there will have been others who will have panicked, cashed in and crystallised what should otherwise have remained a temporary paper loss.

"This emphasises the importance of portfolio planning. Both investment and dis-investment are best conducted with a cool head, the overall objective being a balanced portfolio that meets short, medium and long term needs at an acceptable level of risk."

Note: Figures represent totals for the quarter, not monthly totals within the quarter.

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
Dorian Carrell, Head of Statistics, AUTIF, +44 (0)20 7831 0898

Notes to Editors:

Best selling funds in March 2001

Worst selling funds in March 2001

Summary Sheet
Sector Summary
Retail Gross Sales
Retail Repurchases
Retail Net Sales
Institutional Sales
PEP Summary

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