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Press Release

For immediate release: Friday 5th February 1999

WHAT A DIFFERENCE A QUARTER MAKES

The difference between Q3 and Q4 figures demonstrates just how important it is not to panic when markets turn volatile.

There has been a significant increase in the value of long term investments over the last 3 months, particularly for equity funds. The statistics highlight the virtue of not panicking in a market downturn and how those investors who held on to their investments have subsequently reaped the benefits. They also show how a flexible open-ended product, which does not lock savers in to a fixed term investment comes into its own on these occasions. (1998 Quarter 4 figures in bold, Quarter 3 figures in brackets.)

  • The capital invested in an average Corporate Bond fund in January 1989 had grown by 29% (22%) over the 10 years, compared to 101% (79%) in an average UK Equity Income fund.
  • A lump sum of £1,000 invested in a building society deposit account in January 1989 added £622 (£636) to its value, whilst the investment in an average Corporate Bond fund more than doubled to £2,232 (£2,138). However, the equity fund grew by almost 200% (168%) to £2,999 or £3,368 in a PEP (£2,680 or £3,016 in a PEP).
  • After 10 years, the annual income from a £1,000 investment in a UK Equity Income unit trust was £66 (£65). The income from a Corporate Bond fund averaged out at £55 (£57) after 10 years, whilst the income on an average deposit account dropped to £34 (£33) from £85 in 1989.
  • On regular savings of £50 a month, the equity investment in a UK Growth fund outstripped the savings account deposit after 5 years by £864 (£531). The difference increased to £4,005 (£2,994) over 10 years and £11,322 (9,449) after 15 years.
  • A £1,000 investment in a UK Equity and bond fund was only 8% (8%) higher than an equivalent managed life fund investment, after 5 years and 29% (27%) higher than the deposit account for the same period. The difference on a £50 regular savings plan over 5 years was 7% (6%) on the managed life fund and 22% (11%) on the deposit. After 15 years, the lump sum investment ran 198% (167%) ahead of the deposit and 73% (68%) ahead of the managed life fund; while the regular savings unit trust plan ended 87% (70%) higher than the deposit and 33% (32%) higher than the managed life fund.
  • After 10 years, £1,000 in an average UK Equity and Bond Income Fund beat the Retail Price Index by 110% or 119% in a PEP (83% or 91% in a PEP respectively). The deposit was 9% (8%) ahead of the index.

Please click to view the attached PDF file Charts 1 to 9
Please click to view the attached PDF file Chart 10

For further comment please contact:
Anne McMeehan Director of Communications AUTIF 0171 831 0898
Michael Quach  Head of Statistics AUTIF 0171 831 0898
Clare Arber PR Manager AUTIF 0171 831 0898

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