For immediate release: Monday 16th September 2002

 

QUARTERLY CHARTPACK

EQUITIES VS 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.  

• The capital invested in an average UK Corporate Bond fund in June 1992 had grown by 22% over the 10 years to June 2002, compared to 74% 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 1992 added £310 to its value over 10 years, whilst the investment in an average UK Corporate Bond fund (including both income and capital growth) almost doubled to £1,954. The UK Equity Income fund grew by 146% to £2,462 or £2,649 in an equivalent ISA / PEP. [Charts 1/5]

• Over the ten year period to the end of June 2002 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 £2,462 compared to £2,159 in the Global Growth sector and £2,232 in the UK All Companies sector. [Charts 4/5]

• On regular savings of £50 per month, a savings deposit account beat an equity investment in a UK All Companies fund in the 5 years to June 2002 by £602. Over 10 years however, the equity investment in a UK All Companies fund outpaced the deposit account by £602 and by £3,495 over the past 15 years. [Chart 6]

• A £1,000 investment in a UK Equity Income fund was 29% higher than an equivalent Managed Life fund investment after 10 years, but 88% higher than the average building society deposit account for the same period. The difference on a £50 regular savings plan over 10 years was 20% on the Managed Life fund and 19% on a deposit account. [Charts 7/8]

• After 15 years, a £1,000 lump sum invested in a UK Equity Income fund ran 51% ahead of a deposit account and 38% ahead of a Managed Life fund; while the £50 regular savings unit trust / OEIC plan ended 42% higher than the deposit account and 28% 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 74% or 89% in an ISA / PEP. The deposit account was 4% ahead of the Retail Price Index. [Chart 9]

• Over ten years, the top three performing sectors were the North American Smaller Companies (return of £3,675 on £1,000 lump sum), European Smaller Companies (return of £3,179 on £1,000 lump sum) and North America (return of £3,144 on £1,000 lump sum).  [Chart 10]

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For further information please contact:

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

Helen Stephenson, Communications Officer, IMA, 020 7831 0898

Attachment 1: Charts 1-9

Attachment 2: Chart 10

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