For immediate release: Monday 25 March 2002

   

QUARTERLY CHARTPACK

 EQUITY V’S DEPOSIT RETURNS OVER THE LONG TERM

The attached charts compare savings and investment returns (income and growth) over five, ten and fifteen year periods, for both lump sum investment and regular savings plans.

• Over 10 years to 1 January, the annual income on £1,000 invested in an average UK Equity Income fund rose to £70. The income from a Corporate Bond fund slowed to £46, while the savings income on an average building society deposit account dropped to £24 in the tenth year falling from £58 in 1992. [Chart 1]

• The capital invested in an average Corporate Bond fund in December 1991 had grown by 27% over the 10 years, compared to 96% 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 1991 added £344 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 £2,054. The Equity Income fund grew by 178% to £2,782 or £3,011 in an equivalent ISA/PEP. [Chart 3/5]

• Over the ten-year period to December 2001 average returns from UK Equity Income funds were similar to those achieved by UK All Companies funds and Global Growth funds. After 10 years £1,000 invested in the UK Equity Income sector had become £2,782 compared to £2,450 in the Global Growth sector and £2,635 in the UK All Companies sector.  [Chart 4/5]

• On regular savings of £50 per month, a savings deposit account beat an equity investment in a UK All Companies fund after 5 years by £260. After 10 years however the equity investment in a UK All Companies fund outpaced the deposit account by £1,787 and by £5,602 after 15 years. [Chart 6]

• A £1,000 investment in a UK Equity Income fund was 32% higher than an equivalent Managed Life fund investment after 10 years, but 107% higher than the average building society deposit account for the same period. The difference on a £50 regular savings plan over 10 years was 17% on the Managed Life fund and 31% on a deposit account.    [Charts 7/8]

• After 15 years, a £1,000 lump sum invested in a UK Equity Income fund ran 120% ahead of a deposit account and 58% ahead of the Managed Life fund; while the £50 regular savings unit trust / OEIC plan ended 54% higher than the deposit account and 25% higher than the Managed Life fund.  [Charts 7/8]

• After 10 years, £1,000 invested on a lump sum basis in an average UK Equity and Bond Income fund beat the Retail Price Index by 91% or 108% in an ISA / PEP. The deposit account was 5% ahead of the Retail Price Index. [Chart 9]

• Over ten years, the top three performing sectors were the North American Smaller Companies (return of £4,351 on £1,000 lump sum), North America (return of £3,767 on £1,000 lump sum) and Europe including UK (return of £3,700 on £1,000 lump sum).     [Chart 10]

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

- ends -  

For further information, please contact:

Clare Arber, Head of Communications, IMA, 020 7831 0898

Dorian Carrell, Head of Statistics, IMA, 020 7831 0898

Helen Stephenson, PR Assistant, IMA, 020 7831 0898